Source: CCTV News Client
In the context of global inflation, the inflation rate of Central and Eastern European countries has been higher than the EU average, and Hungary has been the first in the EU for several months.
Driven by strong energy prices and rising food prices, the cost of bread production in Hungary soared, and many bakeries eventually closed down due to poor management and living beyond their means, but some small bread enterprises found their own way to survive in a difficult environment and cruel competition.
Zhang Juan: My current location is Brady Sandor Street in Budapest, and the room on my right is a pastry shop that used to have a history of 65 years. Unfortunately, last September, the store was permanently closed because it was difficult to maintain its operations. And the fate of this pastry shop is also the dilemma that many small and medium-sized enterprises in Hungary once faced.
A year on, the store's signs still hang high, with locked doors and thick layers of dust signaling that it is no longer open. Against the backdrop of inflation, many bakeries have disappeared silently due to the energy crisis and the rise in the price of raw materials such as wheat. However, there are also some bread companies that have adjusted their strategies in time and found a suitable business path.
Wojdau Josef makes traditional Hungarian artisan bread, runs a bakery in a small village 40 km from the center of Budapest, and runs three chain stores in the center of Budapest. Talking about the bankrupt bakery, Wojdow Joseph said that it is not easy to start a baking business now.
Bakery owner Woido Joseph: Energy prices are much higher than before, bank interest rates are much higher than before, labor costs are being paid, and employees are paid more.
According to online statistics, the price of electricity in Hungary peaked in August last year, about 495.7 euros per megawatt hour, 3.9 yuan per kWh, and then the price of electricity began to decline, but compared with the previous year, this year's electricity price is still not low.
Bakery owner Woido Joseph: Raw materials are more expensive now than before. Now there are fewer and more outflows, and we have almost no profit now.
In recent years, with the rise of Hungarian artisanal bakeries, consumer tastes have changed, and the artisan bread produced by Vojdau Josef caters well to the spending power and taste of the masses. This bakery, one of three bakeries run by Woido Joseph, has been around for eight years.
Baier Tauron is the baker of the shop and has worked here since the first day of operation.
Baker Baier Tauron: There are fewer customers and less purchasing power. Now I have 20 to 30 percent less work than before. But thankfully my salary didn't go down.
Since the beginning of this year, food prices have risen across the EU, which has also become a major driver of inflation. According to the Hungarian Central Statistical Office, in July 2023, the cost of food in Hungary increased by 22% year-on-year, down from the previous month's 29.3% increase, which is also the lowest increase since May 2022.
Bakery owner Woido Joseph: The cost of the products in our store has doubled compared to three years ago. Fewer people are coming to buy, and fewer are buying than before.
Local resident: My salary is low, but inflation is high. I don't think it's normal, the price is not normal.
Rising food prices have forced consumers to change their shopping habits and operators to change their sales strategies. In order to improve its competitiveness in the market, the bakery no longer produces complicated pastries, but instead produces basic bread.
Bakery owner Woido Joseph: We don't make bread with cumbersome processes and long production times. We only produce bread that takes a short time. We don't need to produce so many products, only what the customers need.
The bread that Baier Tauron is making is what Wojdow Joseph calls less time-consuming bread.
Baker Baier Tauron: Brown bread is our most popular and best-selling product.
In order to reduce operational risks and minimize costs, Wojdau Josef did not expand the store, but hired only three people to operate here.
In his opinion, reducing the quality of raw materials is no way out for small-scale bakeries, and if customers are just trying to be cheap, they can go to the supermarket to buy cheaper products. In order to win in the market competition, professional baking must ensure quality while carrying out product transformation and profit transfer.
Bakery owner Woido Joseph: We have a lot less of us than we did two years ago. This is easier for us to produce. Compared to a few years ago, the profit is very small now, and there is basically no profit.
Many bakeries are stuck in a cycle of losing money if they don't raise prices, and many bakeries are stuck in this cycle, making it difficult to continue their operations. Woido Joseph seems to have found a balance. Because of his love of baking, he likes to be busy in the workshop all year round, but now even if he only works one day a week, there is still a small amount of bread that cannot be sold. Although the Hungarian government has successively introduced various small and medium-sized enterprise subsidy policies and low-interest loans, Vojdau Joseph did not apply.
Bakery owner Woido Joseph: What is certain is that I won't make a big investment. I'm not going to hire more workers, I'm not going to produce new products that cost a lot.