Food prices set to keep rising amid energy crisis: ABN Amro

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Food prices in the Netherlands are likely to keep rising well into 2027 as soaring energy costs begin to take effect on supply chains, ABN Amro has warned.

Some price increases are already showing up at the till. Egg prices rose 18.4% in March and meat went up by around 10% across the first quarter, while non-alcoholic drinks were 10.4% more expensive across 2025.

Most food companies took out fixed energy contracts after the 2022 energy crisis, which shielded them from the price spikes. But those contracts begin to expire later this year, and amid the ongoing war in the Middle East, higher costs will soon hit the shelves.

The country’s food and drinks industry is heavily reliant on natural gas, which accounts for around 70% of its energy, the bank said in its quarterly sector report.

Gas reliance

The food industry has cut its energy use by 5.5% since 2022, less than half the 11% reduction across the wider Dutch economy. Producers are struggling to switch from gas to electricity because key processes like pasteurising, evaporating and drying require high temperatures that are technically difficult to power with electricity.

Hydrogen is a possible alternative but is not yet economically viable, the bank said. Companies that do want to switch face a further obstacle in net congestion, the overloaded electricity grid that is blocking new and upgraded connections in much of the country.

The industry’s financial structure compounds the problem. Food producers typically replace machinery once every 10 to 20 years, but supply contracts with supermarkets often run for only one or two years – too short to support the longer payback on sustainable equipment.

Most exposed sectors

The flour industry is 89% gas-dependent despite cutting consumption by 24% since 2021, while fruit and vegetable processors and the dairy sector are similarly reliant, ABN Amro notes. Slaughterhouses are an exception, with 42% gas dependence.

Not every product type is rising. Global dairy prices fell 19% in the past year on record milk supply, according to the FAO food price index, although that has not yet fed through to Dutch shop shelves.

Wages are adding a second cost layer, with collective labour agreements in the food sector rising by an average of 3.7% for 2026.

Shoppers are already pulling back. Consumer confidence plummeted in April – the second-largest monthly drop on record, with households switching to private-label brands and eating out less. How much of the squeeze ends up on shoppers’ bills will now depend on negotiations between food producers and supermarkets this year.