One of the online services that I use regularly is Flaschenpost. I like drinking something next to my meal and Flaschenpost provides very good service by bringing your favorite drinks in crates in a maximum of 2 hours.
Yesterday, while I was ordering 2 crates of my favorite soft drink from Flaschenpost, I realized that the prices were different. I couldn’t remember the previous price because I order once a month or once in 2 months. So I checked my emails and found the invoice from the previous order.
Order Date: 22 March 2021
| Item | Price |
|---|---|
| fritz-spritz bio-apfelschorle 24 x 0,33L (Glas) | 19,99€ |
| fritz-spritz bio-rhabarbersaftschorle 24 x 0,33L (Glas) | 19,99€ |
| Total | 39,98€ |
And this is the invoice from my last order.
Order Date: 17 May 2021
| Item | Price |
|---|---|
| fritz-spritz bio-apfelschorle 24 x 0,33L (Glas) | 24,99€ |
| fritz-spritz bio-rhabarbersaftschorle 24 x 0,33L (Glas) | 24,99€ |
| Total | 49,98€ |
As you can see, the price increased from 19,99€ to 24,99€ per crate. This is around a 25% increase.
I was wondering why they suddenly increased their prices. Then, I found out that Dr. Oetker, the parent company of Flashchenpost’s main competitor Durstexpress, bought Flaschenpost for 1 billion € at the end of last year. After the acquisition, they rebranded their service also as Flaschenpost. Right now, as far as I know, there is no other service in Hamburg that delivers drinks in 2 hours. So I assume that since there is no competitor, Flaschenpost decided to increase their prices.
What I find interesting is that before the completion of the acquisition, the Bundeskartellamt (Federal Cartel Office) didn’t see any issue and approved the acquisition. In the press release, the Bundeskartellamt says that:
In the Bundeskartellamt’s view, the merger will not significantly impede effective competition. So far the economic activities of the two companies have only overlapped in some cities. There are numerous other beverage stores in these regions and also many other brick-and-mortar or online-based beverage delivery services. In particular, special online beverage delivery platforms are available to provide the technology which traditional beverage suppliers need in order to be able to gain reach online and operate an online beverage delivery service.
So seems like, from the Bundeskartellamt’s perspective, there is no problem in this acquisition, and every beverage delivery platform can create their online service similar to Flaschenpost. The problem here is that, as you can see, just after a few months of the acquisition, Dr. Oetker increased the prices by 25% by using their market power since there is no other company that offers a similar service. (drinks in crates in 2 hours) There are of course other companies like REWE that offer grocery delivery service but they don’t have the same 2 hours delivery promise. Also, yes, the other companies can provide a similar online service but for that, there are multiple problems. First, you have to have the technological infrastructure to provide a similar service. Second, you have to find the delivery vans and the people who are going to deliver the drinks. The latter one is much harder to find because of the corona pandemic. Everybody is ordering something online and the giants like Amazon have an army of delivery people, they are hiring like crazy and they are evening renting their delivery cars from thee rental services because can’t catch up with the increase in the orders.
From my perspective, Dr. Oetker couldn’t compete with Flaschenpost and they decided to buy their competitor and then, they increased the price so they can get their money back that they use for the acquisition. Right now, I am not expecting anything from the Bundeskartellamt about Flascchenpost’s huge price increase since they already approved the acquisition. My only hope is that when the new players start to join the competition, they will probably cut the price and offer promotions for a similar service. At that point, I will be one of the first ones that will try those services because of Flasschenpost’s this monopolistic move.
The good news is that there are two new players in grocery delivery: Gorrillas and Getir. With enough money from the investors, I believe that they can easily compete with Flashchenpost. (maybe this was what Bundeskartellamt was trying to say?) The only problem that I see is they are using bikes and motorbikes for the delivery. (which is good for the environment) That means that they might not able to deliver drinks in crates.