The newly divided family business has so far defied the pandemic. But now the costs are rising rapidly. However, the Oetker boss rules out plant closures.

The family business split up in November 130 years after it was founded. This was preceded by a year-long dispute between the heirs of the patriarch Rudolf-August Oetker.

Bielefeld “I cry for every business area that has been spun off. But the decision was long overdue,” said Albert Christmann, personally liable partner of Dr. August Oetker KG, on Tuesday in Bielefeld. For the first time since the real division of the Oetker Group last November, he presented the business figures for the traditional family company.

130 years after it was founded, the widely ramified group had split up. This was preceded by a long and bitter power struggle between the descendants of three marriages of the patriarch Rudolf-August Oetker, who died in 2007.

“It is gratifying when all shareholders pull together. They are very satisfied with the situation,” emphasized Christmann, who has been the first non-family manager to lead the group since 2017. “Now we can focus 100 percent on our business, before some days were very long,” he said, referring to the quarrels behind the scenes.

Christmann leads the Dr. August Oetker KG, which was added to the five siblings from the first two marriages – referred to internally as “G5” – and their families. Your sales shrank in 2021 due to the division from 7.3 billion to 5.8 billion euros. 39,000 people are employed there worldwide.

Christmann is very concerned about the disruption to the supply chain as a result of the pandemic and the war in Ukraine. As a result, the costs for raw materials and energy have increased in the high double digits. Therefore, the Oetker Group sees itself forced to raise prices for the second time this year. “Many of our recipes contain sunflower oil, for example,” explained Christmann. This is scarce and expensive because Ukraine is not an important supplier country.

Oetker boss does not want to close any plants
Price negotiations with retailers are already underway, and consumers must expect higher prices “after the summer”. Oetker wants to pass on as few costs as possible to buyers and prefers to save internally. Overall, however, consumers must be prepared for double-digit price increases.

advertisement
“In order to remain attractive as a branded company compared to cheaper private labels, we have to cut our costs massively,” said the industrial engineer. “We turn every stone in 43 countries.” There are many adjusting screws: In this way, the complex range could be made more efficient and material for packaging could be saved. Digitization makes cheaper production and faster delivery possible.

However, Oetker will not give up any works, said Christmann. He cannot completely rule out job cuts at the moment, but a decision will only be made in six months.

The focal points of August Oetker KG are the food division Dr. Oetker with pizza, desserts and baking, the frozen confectionery Coppenrath & Wiese, the drinks group Radeberger and the express delivery service Flaschenpost as well as two luxury hotels.

At the same time, the three children from Rudolf-August Oetker’s third marriage – known as “G3” – founded the Geschwister Oetker Beteiligungen KG. This has around 10,000 employees and generates around two billion euros in sales. These include the world’s largest sparkling wine producer, Henkell Freixenet, the baking agent company Martin Braun, the Budenheim chemical plant, several hotels and the Rudolf-August Oetker art collection.

The three siblings also received 1.6 billion euros in funding, explained Ute Gerbaulet, who, as a personally liable partner, is responsible for finance, among other things. With the sale of the Hamburg Süd shipping company in 2017, the Oetker Group had a high level of liquidity.

At the same time, bank liabilities of around 1.37 billion euros remained with the shrunken Dr. August Oetker KG. Despite this, the equity ratio is stable at 40 percent. The company still has reserves of almost 1.5 billion euros.

Message in a bottle drives growth
“The clarity that has now been gained at Oetker can indeed benefit everyone involved – if they manage to set up and further develop the respective business units as focused units,” says Sebastian Theopold, founder of the Munich Strategy consultancy. “In any case, the majority of the transactions were very different and had enough weight in the market.”

By the end of October, sales for the entire group had increased by 5.5 percent. “We’ve grown mainly because of the message in a bottle,” explained Christmann. The operating result of the group was “very adequate”, Ute Gerbaulet did not reveal more.

In December 2020, the Oetker subsidiary Durstexpress surprisingly took over its larger competitor Flaschenpost. The purchase price is said to have been at least 800 million euros.