Crumble the yeast into the lukewarm milk, add a little sugar and flour, and let it proof in a warm place for 10 minutes. TIP: It's ready when it's bubbly and foamy.
In a large bowl, combine the flour, remaining sugar, vanilla sugar, salt, and ground cinnamon.
Add the egg, melted butter, and the proofed yeast mixture. Knead until you have a smooth, elastic dough.
Cover the dough and let it rise in a warm place for 45-60 minutes, or until doubled in size.
Roll out the risen dough into a rectangle, sprinkle with the caramel chunks, and gently knead them in.
Fold the dough in half lengthwise, so that one side slightly overlaps the other – this is the classic Stollen shape.
Place the dough on a baking sheet lined with parchment paper, cover, and let it rest for 15 minutes. Meanwhile, preheat the oven to 350°F (180°C).
Bake for 35-40 minutes, or until golden brown. If the top browns too quickly, cover it with parchment paper.
While still warm, dust with powdered sugar. TIP: Brushing with melted butter helps the powdered sugar adhere better and keeps the dough softer for longer.
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