Drinks: The beer is no longer running - breweries are in a pinch

In Germany, less beer was drunk last year than even in the Corona year 2021.

Drinks: The beer is no longer running - breweries are in a pinch

In Germany, less beer was drunk last year than even in the Corona year 2021. The breweries are in alarm because their total sales have now reached a new low after the short recovery in 2022. 8.4 billion liters means a decrease of 4.5 percent, as reported by the Federal Statistical Office.

The traditional drink is becoming less and less popular among German and international customers. In addition to the trends of healthy eating and an aging society, sharply rising costs and cautious consumers have caused great concern in the industry since the Russian attack on Ukraine.

Concerns about the energy transition

The biggest problems are yet to come: the production of beer is very energy-intensive with the heating and cooling of large quantities of liquid. The President of the German Brewers' Association, Christian Weber, recently warned of the immense costs in an interview: "If we have to electrify our breweries in the near future in order to achieve climate neutrality, we are talking about costs in the billions."

Cleaning bottles also requires a lot of energy. "In order to completely convert a brewery from gas operation to alternative processes, you would have to rebuild around 80 percent of a brewery."

Even if Weber relies on the innovative strength of its member companies: the desired climate change is affecting a weakened industry. Since 1993, beer sales in Germany have fallen by more than a quarter. Last year alone, brewing capacity for more than 200 million liters was taken off the market. Among other things, the market leader Radeberger has closed the traditional Binding brewery at its headquarters in Frankfurt am Main. In Hesse's largest city there are only small, craft breweries or, as an alternative, the wineries for the locally popular apple wine.

Veltins sees nervous competitors

The situation of small and medium-sized companies in particular will inevitably worsen in view of the accelerated sales losses, explained the head of the Sauerland Veltins brewery, Michael Huber. The lower volumes were by no means sufficient to reduce the long-standing overcapacity. There is great nervousness among brewers given the high costs. "The essential investments in energy transformation mean the foreseeable end for many breweries because there is a lack of profitability and economic viability can no longer be achieved."

For years, sales of non-alcoholic beers that are not included in tax statistics have been developing better than sales of classic varieties, which, according to the Brewers' Association, will probably also be the case in 2023. Nevertheless, the bottom line was that there was a deficit in this area in the slack year, says managing director Holger Eichele. Nevertheless, he still sees non-alcoholic beers as a source of hope, with a current market share of seven percent. "We expect that soon every tenth beer brewed in Germany will be alcohol-free. No other segment in the brewing industry has experienced such strong growth in the last ten years."

Beer is unlikely to get any cheaper for German consumers in the foreseeable future. Eichele criticizes the “ruinous price war” that large retail companies are waging at the expense of the entire food industry. "Nobody understands why a beer brewed in Germany with craftsmanship and the best local raw materials is consistently cheaper than simple soft drinks."

The costs of raw materials, production and distribution have risen sharply in recent years. Inflation-stricken consumers are holding back. According to Veltins, the bottled beer business in retail has recently lost around 5 percent, while draft beer is at 85 percent of the level from the pre-Corona year of 2019.

“Nagelsmann help!”

The majority of the big beer brands will not be able to avoid sales losses in 2023, the trade magazine “Inside” states in its annual report. The short-term hopes now lie in a successful and fun European Football Championship with a new coach in their own country. “Nagelsmann help!” is the motto.

Last year, beer exports weakened even more sharply, with a volume decline of 5.9 percent, than domestic consumption, which fell by 4.2 percent. The per capita consumption of the total population, which was still 86.5 liters in 2022, is likely to have continued to shrink, but has not yet been available to the Federal Office due to a lack of import figures.