Saturday, 10 May 2025
As Fat Thursday sees an annual surge in the consumption of doughnuts, Polish confectioners continue to face financial difficulties amid rising costs and increasing competition. The cost of essential ingredients such as butter, flour, and sugar has risen steadily, while consumer preferences shift toward healthier alternatives. Data from the Register of Debtors BIG InfoMonitor and the BIK database indicate a growing burden of overdue debt for confectionery businesses, highlighting the challenges faced by the industry.
Rising Ingredient Costs and VAT Increase Impact Prices
The traditional recipe for doughnuts has remained largely unchanged since the 18th century, but production costs have increased significantly. Inflation at the end of 2024 stood at 4.7%, but certain food products experienced sharper price hikes. Butter, for example, saw a 27.1% increase in Poland, exceeding the EU average of 21.3%, as reported by Eurostat.
The rising costs of butter, eggs, and other key ingredients were compounded by a VAT increase on food from 0% to 5%, leading to higher prices for consumers. Despite this, the increased cost of doughnuts did not reduce the financial difficulties faced by confectionery businesses. Overdue debts in the sector grew by 23% in 2024, reaching over PLN 21 million.
Competition from Large Retailers and Consumer Shifts
Beyond rising costs, confectionery businesses face growing competition from large retail chains and discount stores. Doughnuts and other baked goods are widely available at supermarkets, often at significantly lower prices. A doughnut in a large store costs around PLN 3, while artisan confectioneries charge over PLN 20 for handcrafted alternatives. This pricing disparity has influenced consumer behavior, with many choosing cheaper alternatives or limiting their purchases, even on Fat Thursday.
Debt Trends in the Confectionery Industry
Unlike retailers, doughnut producers (PKD 1071Z – bread and confectionery production) have seen a decline in outstanding debt, which fell by 12% year-on-year. However, the total unpaid debt in this sector remains high at PLN 200 million, ten times more than that of confectionery retailers.
Producers of raw materials for confectionery, such as butter, flour, and fruit fillings, have seen improvements in their financial standing. The overdue non-credit debt of dairy product manufacturers (PKD 105) declined by 57%, while flour producers (PKD 1061Z) reduced their liabilities by 62.7%. The most significant improvement was recorded in the oil and fat production sector (PKD 104), where outstanding debt decreased by 72% year-on-year, falling from PLN 100 million to under PLN 30 million.
Future Outlook for the Industry
According to Waldemar Rogowski, chief analyst at BIG InfoMonitor, several factors contribute to the varying financial conditions within the sector. Producers who own their sales networks and supply frozen bakery products to supermarkets have more financial stability than smaller artisan bakeries. Additionally, industrial-scale confectioneries benefit from automation, which reduces labor costs, while craft bakeries rely on more expensive raw materials and manual labor.
Despite some improvements in raw material production, the long-term outlook for traditional confectionery businesses remains uncertain. The shift in consumer preferences toward health-conscious choices and continued financial pressures may reshape the industry in the coming years.
Source: InfoMonitor
