Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Oetker Family Rebuilt a Frozen Food Empire
Transcript
- Lucas: May 2026. The German frozen dessert aisle is a battlefield. On one side, private-label brands from Rewe and Aldi that undercut you by 30 percent. On the other side, a 133-year-old family company that most people know for little blue packets of baking powder. Luna: Dr. Oetker. I grew up seeing that blue box in my grandmother's pantry. But they're also one of the biggest frozen food producers in Europe. Lucas: Right. And in 2018, when Dr. Arend Oetker took over as the sixth-generation family CEO, the frozen division had lost 4 points of market share in its home market over five years. Private label was eating them alive. The family's initial reaction was to try everything — new flavours, new packaging, fancier marketing. Luna: Did any of it work? Lucas: Barely. What Arend did instead was something most family businesses hesitate to do: he walked away from a major product line. In 2020, Dr. Oetker exited the frozen pizza business in Italy — a market where they'd been number four for years, but where margins had shrunk to low single digits. He said publicly, 'We cannot win on price against private label in a commodity category.' Luna: So he cut a whole category. That must have been a tough sell to the family board. Lucas: It was. Pizza had been part of the portfolio since the 1980s. But Arend argued that every euro they put into pizza was a euro they weren't putting into frozen cakes and desserts — which had higher margins and more brand loyalty. The family trust agreed. And that decision freed up about 40 million euros in annual marketing spend. Luna: Where did that money go? Lucas: Into one thing: a single, fully automated production line for frozen cheesecake at their plant in Oberwerrn, Germany. The line cost 25 million euros and could produce 18,000 cheesecakes per hour. The bet was that by owning the cheapest production in the category, they could keep prices competitive without sacrificing margin. Luna: That's a pretty huge bet on one dessert. Lucas: It was. But the results are measurable. By early 2024, Dr. Oetker's frozen dessert market share in Germany had climbed back to 16.8 percent — up from 14.1 percent in 2019. In the premium frozen cake segment specifically, they're now number one in Germany, ahead of Nestlé's frozen brand. Luna: So the strategy was less about doing more things and more about doing one thing really efficiently. Lucas: Exactly. And that's a pattern you see in successful family business turnarounds. The family's long time horizon — they're not answering to quarterly earnings calls — lets them make a single, big capital investment and wait three years for it to pay off. Luna: Let's talk about that family trust structure. Because I think that's a hidden piece of the story. Lucas: It's central. The Dr. Oetker family ownership is held through a trust that explicitly separates strategic control from operational management. The trust owns 100 percent of the equity. Family members serve on a supervisory board, but they cannot interfere in day-to-day decisions. Arend Oetker has the authority to make calls like the pizza exit without needing his cousins to sign off on every line item. Luna: That's rare. A lot of family firms in Germany have family members in management roles who second-guess the CEO. Lucas: Right. And that's often why they stagnate. The Oetker trust was restructured back in 2010 after a very public family feud between two branches — the baking powder side and the frozen food side. The settlement created the current structure, with an independent chairman of the supervisory board who isn't a family member. That's a former Deutsche Bank executive named Friedrich von Metzler. Luna: A non-family chairman overseeing the family trust. That's a level of governance that most family businesses resist. Lucas: It was part of the peace deal. And it's worked. Since 2018, Dr. Oetker's frozen division has grown revenue from about 1.8 billion euros to an estimated 2.2 billion in 2025. Not explosive growth, but steady — and entirely organic. No acquisitions. Luna: That's one thing that stands out to me about this story. They didn't buy their way back to growth. They shrunk to strength. Lucas: They did. And they also did something else that's interesting: they leaned into the 'Dr.' in the brand name. The company was founded by Dr. August Oetker in 1891, and for decades the brand played down the medical-sounding origin. But starting in 2022, they put 'Dr. Oetker' in bigger letters on packaging, and their ads started emphasizing the scientific precision of the recipes. It's a way of signalling quality over private label. Luna: If these conversations have moved your work forward in some small way, it's worth knowing that they only exist because a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo. That's literally what keeps it ad-free and focused on cases like this one. Lucas: Yeah, it's a small group that funds a lot of research. And it means we can spend time on a story like Oetker without worrying about ad breaks. So if that's something you want to be part of, you know where to find it. Luna: Alright, back to the frozen aisle. Lucas, you mentioned the private label threat is still there. How is Dr. Oetker defending against it now? Lucas: The latest move is a supply-chain play. In 2024, they opened a new distribution centre in Erfurt that's almost fully automated — robots pick and pack frozen cakes at minus 22 degrees Celsius. That cut their distribution cost per unit by about 12 percent. And because they own the facility outright, they can pass some of those savings into pricing without hurting margins. Luna: So they're using automation to compete on price without becoming a commodity brand. Lucas: Exactly. And they're also launching smaller pack sizes — four-packs of mini cakes instead of the traditional eight-pack — to hit a lower price point without diluting the brand. It's a way to compete with Aldi's frozen desserts at the shelf without putting the Dr. Oetker name on a cheap product. Luna: Is there a risk that the brand gets stretched too thin across all these categories? Lucas: That's the question. Dr. Oetker is still in frozen pizza in Germany and most of Europe — they only exited Italy. And they have a big presence in baking mixes, pudding, and cake decorations. The brand equity is broad but shallow in some areas. Arend Oetker has said publicly that he's open to selling the pizza business entirely if the right offer comes, because he wants to concentrate on desserts and baking. Luna: That would be a big move. But it would also signal a clear strategy: we're a dessert and baking company, full stop. Lucas: And that clarity is exactly what family businesses often lack after a few generations. The founder's vision gets diluted by incremental decisions. Arend's approach is to reverse that — to pull the company back to its core strengths, even if it means letting go of products that have been around for decades. Luna: There's a lesson there for any family firm that's feeling squeezed by private label or by new competitors. Don't try to defend everything. Pick the hill you can win on. Lucas: And build a governance structure that lets you make that choice without getting bogged down in family politics. The Oetker trust is a case study in how to separate ownership from management in a way that preserves both family control and professional decision-making. Luna: One last thing — the company's revenue per employee. Do you have that number? Lucas: I do. In 2019, Dr. Oetker's frozen division had about 12,000 employees and revenue of 1.8 billion euros — that's 150,000 euros per employee. By 2025, they had 10,500 employees and 2.2 billion in revenue — about 210,000 per employee. A 40 percent improvement in productivity in six years. That automation line and the distribution centre are the main drivers. Luna: So the next generation can look at that and say: we don't have to grow by adding people. We can grow by investing in the right machines and the right focus. Lucas: That's the playbook. And it's a good note to end on. What Arend Oetker did wasn't flashy — it was disciplined, measurable, and patient. Three things that any family business can aim for. Luna: Even if you don't have a 133-year-old brand behind you. Lucas: Exactly.