display

Germany is known for its beer culture.

But now this particular diversity is in massive danger.

In any case, the German Brewers Association (DBB) is sounding the alarm and urgently warning of a wave of bankruptcies among Germany's beer suppliers.

"The situation is dramatic and unprecedented in the post-war period," says DBB Managing Director Holger Eichele, referring to a current industry survey.

After that, more and more medium-sized and artisanal breweries reported "drastic and often existence-threatening slumps in sales" due to the corona crisis.

On average, the 80 companies surveyed recorded a minus of 23 percent in the pandemic year 2020, but in individual cases it was up to 70 percent, according to the association.

Small beer manufacturers in particular, who are mostly affected to an above-average extent by the lack of sales in restaurants and the cancellation of festive events, complain about devastating losses.

"The fear of the future is great," says the DBB.

Source: WORLD infographic

The survey is not representative, however, as the Brewers' Association itself notes.

Eichele therefore also speaks of a mood.

And in fact, the balance sheets of the major domestic brewers, whose branded beers are in supermarkets nationwide, read very differently.

display

Noticeable losses have also accumulated there: Industry leader Radeberger, for example, reports a sales drop of 4.7 percent for the entire group with dozens of brands, at Krombacher it is 4.8 percent, at Veltins 3.5 percent.

Warsteiner stands out the most with a volume loss of 16.2 percent.

Big slump in draft beer

The Federal Statistical Office published at the end of January how much the market has lost overall.

According to the authority, up to and including November it was 5.3 percent or the equivalent of 4.5 million hectoliters.

If December is added, according to industry estimates, it should be over six percent and thus 5.5 million hectoliters, i.e. 550 million beer mugs or 1.1 billion half-liter bottles.

"The pandemic has torn a hole in the beer market," comments Volker Kuhl, Veltins' sales manager.

Source: WORLD infographic

The German beer market, which has been declining for decades due to demographic change and changed consumer habits, will lose almost as much in the crisis year 2020 as in the previous ten years.

“Even the usual loss of sales hits the industry hard,” says Guido Mockel, spokesman for the Radeberger Group's management.

display

Now the brewing industry has to cope with in twelve months what would have happened organically over a period of several years.

“The year 2020 was a time machine that drastically increased the existing pressure,” Mockel describes.

The manager predicts that it will take a long breath, a lot of patience and a lot of strength before the industry has recovered from this impact.

"If this can be done completely at all."

According to the brewers' association, there are many reasons for the historic crash, especially the pubs, restaurants and discos that have been closed for a long time due to Corona, as well as unusual festivals, celebrations, concerts and events across the country.

In addition, sporting events take place without spectators, for example in the Bundesliga, whose stadiums are usually among the largest pubs in Germany on match days.

Several breweries therefore had to struggle with the best before date for draft beer over the course of the year - and even had to destroy large quantities in some cases.

Source: WORLD infographic

Conversely, sales of bottled beer have skyrocketed.

Because supermarkets and discounters were the only remaining sales channel for months.

Between January and October, bottle sales in the German beer market were already up six percent, according to the latest figures from market researcher Nielsen.

And the lockdown in November and December should have further strengthened this development.

display

Evidence is provided by Veltins' balance sheet, among other things: bottled beer sales in the Sauerland in the food retail sector rose by almost nine percent to 1.8 million hectoliters for the year as a whole.

"We even had to buy new boxes and bottles in between," reports Michael Huber, the family company's general manager.

At the same time, the brand's draft beer sales have more than halved: from 490,000 to just 210,000 hectoliters.

“In twelve months we lost what we had previously built up over decades with our catering partners,” regrets Huber.

Unstable market position

The fact that Veltins can still bear this crash despite the significantly higher contribution margins in this area is due to the comparatively low draft beer share of a good 17 percent.

It looks very different with small providers.

"There are a number of breweries with 60, 70 or even 80 percent catering," says Lothar Ebbertz, the chief executive of the Bavarian Brewers' Association.

Pub breweries are even designed entirely for the high-margin pub business.

"Basically, the smaller the brewery, the greater the dependency on gastronomy."

And the proportion of these small beer manufacturers is huge.

Of the last 1548 registered breweries in Germany, 1124 and thus more than 70 percent have an annual production of less than 5000 hectoliters.

“Some of this diversity is likely to fall by the wayside due to Corona,” predicts Christian Gieselmann, Warsteiner's managing director.

“Especially since the 2021 crisis will not be over.

The first quarter is already practically lost. ”It will be two or three years before the situation for the breweries normalizes to some extent.

But many of the little ones should not be able to hold out.

The self-assessment of the companies in the Bauer-Bund survey also suggests this: Two thirds of the participants fear that there will be a significant number of company closures and bankruptcies.

For some it could be a matter of weeks or months, for others it could be years.

"Operational tasks as a result of the pandemic will accompany the brewing industry for the whole decade," fears Veltins boss Huber, for whom the crisis shows "how unstable the market position of many brewers is".

Huber therefore also expects takeovers - and keeps his eyes open himself.

"We will not buy a larger brewery," he says in an interview with WELT.

"But we are definitely interested in a strong regional brand."

Because Huber sees a fundamental desire for beer among consumers in the future too.

It is not without reason that there are so many enticing offers in supermarkets and discounters.

According to the Drotax market researchers in December 2020, the average promotional price for the popular branded pils beers Warsteiner, Beck's, Bitburger, Veltins and Krombacher was between 10.86 euros and 11.58 euros per crate of 20 half-liter bottles.

Experts are now expecting a product offensive in the coming weeks and months, also to demonstrate brand strength.

Warsteiner has already hinted at this and wants to concentrate on the area of ​​non-alcoholic beer.