A plate with a $5 bill sitting on a table, and someone is pretending to eat it with a fork and knife
Photo: Canva

Penny, the German discount grocer, just completed a week-long campaign that temporarily raised the prices of nine products, mainly dairy and meat, to reflect their costs on the climate (including soil and water use) and human health.

The “wahren Kosten” or “true costs” campaign, which ended on August 5, saw prices of Maasdam (dutch swiss) cheese surge 94%, wiener sausages jump 88%, and mozzarella climb 74% in all 2,150 German Penny stores. Smaller increases were seen in products such as fruit yogurt, rising 31%, and vegan schnitzel, up 5%. Shoppers also saw prices they normally pay.

Academics from the University of Greifswald and the Nuremberg Institute of Technology calculated the hidden true cost for each product. Any extra profit will be donated to family farms in the Alps.

The true costs factor in the damage caused by a product that the public or taxpayers pay for, according to Penny. These include health risks tied to product ingredients, such as high sugar content, as well as the eco-damage from food production. For instance, the Maasdam cheese price hike took the following factors into consideration: the cost of emissions from methane and carbon, soil damage caused by intensive farming and animal feed production, the use of pesticides and their effects on farmers’ health, and groundwater pollution due to fertilizer.

The campaign attempts to broaden the discussion around food prices and creating affordable options for high-quality food amid sustainability demands. An online poll by YouGov found only 16% of Penny customers had planned to support the campaign.

“We see that many of our customers are suffering from the persistently high food prices. Nevertheless, we have to face the uncomfortable message that the prices of our food, which are incurred along the supply chain, do not reflect the environmental costs,” said Penny COO Stefan Görgens in Germany at a press conference.

The general secretary of the German Farmers’ Association called the campaign greenwashing, and consumer watchdog Foodwatch said it was a “PR stunt.” Other consumer and environmental organizations were more positive but see the initiative as a first step. Greenpeace’s agricultural expert Matthias Lambrecht said, “The action must finally be followed by fundamental measures. The supermarket chains are just as responsible as the federal government.”

BrainTrust

“It’s an interesting approach, but the wholesale changes needed to right this ship are more than one grocery chain can take on.”

Jenn McMillen

Chief Accelerant at Incendio & Forbes Contributing Writer


“This is a good idea, but I use the word “good” cautiously. It certainly is not sustainable for the retailer.”

Gene Detroyer

Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.


“It would take industry-wide regulation to get closer to prices that reflect externalities like health and environmental impacts.”

Keith Anderson

Founder, Decarbonizing Commerce

Discussion Questions

DISCUSSION QUESTIONS: Would a campaign highlighting the hidden costs of food prices be welcomed and constructive in the U.S.? Do you think Penny’s “true cost” and similar campaigns will have much of an impact?

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8 responses to “German Grocer Highlights ‘True Cost’ of Food Production”

  1. Neil Saunders Avatar
    Neil Saunders

    As Penny has generated a lot of media coverage from this campaign it has been a successful exercise in raising awareness of the chain and stimulating discussion around issues such as sustainability and the prices paid to farmers. Excess sales from the price hikes will also be donated to a farming charity, which is a plus. 
     
    All that said, this isn’t something that will create widespread change. Especially not at the moment when most households – including in Germany, where consumers are extremely frugal – are struggling with the cost of food.
     
    It is also something of a theoretical exercise to factor in health and environmental costs as this simply isn’t how markets work in terms of how prices are set – and no amount of wishing or wanting can change that. Indeed, if Penny were to roll this out on a serious basis – rather than confining it to nine products – it would get slaughtered in the German market which, after all, gave rise to two of the world’s biggest discount food chains: Aldi and Lidl.

  2. Gene Detroyer Avatar
    Gene Detroyer

    This is a good idea, but I use the word “good” cautiously. It certainly is not sustainable for the retailer. My fear is that it will send the wrong signal to many shoppers who thought they cared about the environment.

    Will they throw their hands up and decide they can’t afford to be green and just stop trying?

    1. John Karolefski Avatar
      John Karolefski

      I agree that shoppers throwing up their hands and deciding they can’t afford to be green is a real possibility. I suspect that many shoppers are secretly looking for a reason to do so.

  3. Keith Anderson Avatar
    Keith Anderson

    As a controlled exercise in raising awareness, this is a clever campaign.

    That said, it would take industry-wide regulation to get closer to prices that reflect externalities like health and environmental impacts.

  4. Jenn McMillen Avatar
    Jenn McMillen

    Remember when the pandemic hit and everyone said “Wow, we don’t pay teachers enough”? Then after the pandemic subsided, so did that discussion? This feels like the same thing. It’s an interesting approach, but the wholesale changes needed to right this ship are more than one grocery chain can take on.

  5. Scott Norris Avatar
    Scott Norris

    It sounds as if many arbitrary / pulled-out-of-the-air estimates were used and not consistently across the product portfolio – how can shoppers trust what the chain is saying? As Neil says, this isn’t how markets work – what gets measured, gets managed – and people find ways to substitute inputs, modify processes, and alter logistics to create favorable outcomes. Not to be Pollyanna-ish, as thinking about consequences makes us change our habits and goals – but this planet would have already burned to a crisp if we hadn’t made big progress from where we were in the mid-1970s thanks to hard work from industry and academia and citizens, and a lot of government help. Less banging on pans and parading in giant puppet heads and vilifying scientists while letting polluters write laws; more applied research, better land planning, and transparency, please.

  6. Craig Sundstrom Avatar
    Craig Sundstrom

    An interesting idea certainly, but I rate the chance of it “succeeding” – i.e. by itself leading to some kind of sustained changes – as nil. Rightly or wrongly the accuracy of the claims will be attacked – “health costs” for example are being double counted since people are paying thru those already thru their insurance – and that’s for those who understand the concept…many, many won’t get that far.

  7. Brad Halverson Avatar
    Brad Halverson

    They have a good idea in place since consumers want to learn more about what’s happening behind the scenes, and so they can make better decisions. But gut says this is heavy on information, creates decision fatigue at the store, and am not sure customers will be able to digest it frequently. Pulling back some of the detail and taking a more summary oriented stance might help (that could be a preferred American thing).

    Benefits, upside and opportunities sell well in retail. Stew Leonards has been one of the best at educating shoppers where inflation and supply chain is impacting their food costs and shopping option. They communicate simply, in a way so customers understand the benefits of switching items, and what to do with the food as it relates to cooking tips.

8 Comments
oldest
newest
Neil Saunders
Neil Saunders
1 day ago

As Penny has generated a lot of media coverage from this campaign it has been a successful exercise in raising awareness of the chain and stimulating discussion around issues such as sustainability and the prices paid to farmers. Excess sales from the price hikes will also be donated to a farming charity, which is a plus. 
 
All that said, this isn’t something that will create widespread change. Especially not at the moment when most households – including in Germany, where consumers are extremely frugal – are struggling with the cost of food.
 
It is also something of a theoretical exercise to factor in health and environmental costs as this simply isn’t how markets work in terms of how prices are set – and no amount of wishing or wanting can change that. Indeed, if Penny were to roll this out on a serious basis – rather than confining it to nine products – it would get slaughtered in the German market which, after all, gave rise to two of the world’s biggest discount food chains: Aldi and Lidl.

Gene Detroyer
Gene Detroyer
1 day ago

This is a good idea, but I use the word “good” cautiously. It certainly is not sustainable for the retailer. My fear is that it will send the wrong signal to many shoppers who thought they cared about the environment.

Will they throw their hands up and decide they can’t afford to be green and just stop trying?

John Karolefski
John Karolefski
  Gene Detroyer
1 day ago

I agree that shoppers throwing up their hands and deciding they can’t afford to be green is a real possibility. I suspect that many shoppers are secretly looking for a reason to do so.

Keith Anderson
Keith Anderson
1 day ago

As a controlled exercise in raising awareness, this is a clever campaign.

That said, it would take industry-wide regulation to get closer to prices that reflect externalities like health and environmental impacts.

Jenn McMillen
Jenn McMillen
1 day ago

Remember when the pandemic hit and everyone said “Wow, we don’t pay teachers enough”? Then after the pandemic subsided, so did that discussion? This feels like the same thing. It’s an interesting approach, but the wholesale changes needed to right this ship are more than one grocery chain can take on.

Scott Norris
Scott Norris
1 day ago

It sounds as if many arbitrary / pulled-out-of-the-air estimates were used and not consistently across the product portfolio – how can shoppers trust what the chain is saying? As Neil says, this isn’t how markets work – what gets measured, gets managed – and people find ways to substitute inputs, modify processes, and alter logistics to create favorable outcomes. Not to be Pollyanna-ish, as thinking about consequences makes us change our habits and goals – but this planet would have already burned to a crisp if we hadn’t made big progress from where we were in the mid-1970s thanks to hard work from industry and academia and citizens, and a lot of government help. Less banging on pans and parading in giant puppet heads and vilifying scientists while letting polluters write laws; more applied research, better land planning, and transparency, please.

Craig Sundstrom
Craig Sundstrom
1 day ago

An interesting idea certainly, but I rate the chance of it “succeeding” – i.e. by itself leading to some kind of sustained changes – as nil. Rightly or wrongly the accuracy of the claims will be attacked – “health costs” for example are being double counted since people are paying thru those already thru their insurance – and that’s for those who understand the concept…many, many won’t get that far.

Brad Halverson
Brad Halverson
1 day ago

They have a good idea in place since consumers want to learn more about what’s happening behind the scenes, and so they can make better decisions. But gut says this is heavy on information, creates decision fatigue at the store, and am not sure customers will be able to digest it frequently. Pulling back some of the detail and taking a more summary oriented stance might help (that could be a preferred American thing).

Benefits, upside and opportunities sell well in retail. Stew Leonards has been one of the best at educating shoppers where inflation and supply chain is impacting their food costs and shopping option. They communicate simply, in a way so customers understand the benefits of switching items, and what to do with the food as it relates to cooking tips.