Fusion of the sausage giants: The Family Butchers saved from extinction!

Fusion of the sausage giants: The Family Butchers saved from extinction!

A significant upheaval is underway at the heart of the German food industry. The Premium Food Group (PFG), formerly known as Tönnies, is planning to take over The Family Butchers (TFB). This merger, which was recently approved by the Federal Cartel Office, could have a decisive impact on the industry, especially since TFB has been under pressure from discounters such as Lidl for a long time.

The numbers speak for themselves: TFB recorded sales of around 700 million euros in the past, while PFG was even able to achieve 7.3 billion euros worldwide in 2023. However, despite this strong position, TFB is in a precarious position as 60% of its products have been sold to Lidl. This dependency makes it necessary for the company to have a strong majority owner in order to be successful in the future and to be able to conduct negotiations better.

The market is changing

The approval of the merger between PFG and TFB is not only seen as a way to avert insolvency risks for TFB. Rather, it also represents a turning point in the competition in the food industry. Like that DHBW describes, the year 2025 will already show a wave of mergers in the food industry. These movements aim to enable greater efficiency, a broader market spectrum and concentrated innovative power.

In particular, the takeover of smaller and specialized providers by large manufacturers is a growing trend. One example is the merger between DMK and Arla Foods, which promises sales of 19 billion euros. Such moves are playing a key role in reshaping the competitive landscape and could be crucial for the future of the Welsh food industry and, in turn, consumers.

The challenges and opportunities

Despite PFG's strong positioning and acquisition, market share concerns remain. The Federal Cartel Office has determined that after the merger the companies' market shares in most types of sausage remain below 40 percent. This is intended to ensure that there is sufficient competition and that larger providers do not dictate all the diversity in the market.

But what does this mean for the purchasing strategies of retailers like Lidl and Edeka? They not only have their own sausage production, but also use their market position to put pressure on suppliers. The decision to acquire small suppliers through takeovers could result in product diversity suffering while at the same time providing access to better conditions.

In this dynamic market situation, it is now up to PFG and TFB to shape their future in the industry with clever management. Both companies could need a good hand in order to master the challenges of negotiating pressure and innovative strength. Regional jobs and the survival of smaller providers could depend on future developments.