Wednesday 6 February 2013

Are Germans losing their taste for beer?

That's certainly the implication of recent statistics from the Federal Statistics Office here. They show a continued downward trend in production during 2012, as well as reporting that national consumption is now at its lowest since reunification. German breweries produced 96.5m hectolitres last year, down from 107.8m a decade ago.

People commenting on the news via The Local suggested a variety of reasons - health consciousness and neo-Puritanism perhaps, or a shift towards wine, or the limited variety of beers available compared with the US.

The news follows a report compiled by business students at the University of Pennsylvania’s Wharton business school which suggests that “the German brewing industry is at a crossroads", and that unless something changes the country will continued to lose breweries - they cite numbers from the Bavarian Brewers Federation, which says that more than 230 breweries have closed since 2000, nearly 20% of the total.

How could this happen? The Wharton students rightly cite German brewers’ conservatism as part of the problem. Wedded to the Reinheitsgebot - a puffed-up piece of loophole-filled medieval law - most have done little to innovate, or indeed to actively seek export markets.

Along similar lines, they note that while Munich’s Oktoberfest is an important part of Germany’s beer culture, it is closed to 99% of Bavarian breweries - only six out of 600 are allowed to sell their beer there. They also mention that Oktoberfest has a less than favourable reputation among some locals, although they don’t seem to notice that this might be because it’s a festival of quantity, not variety - each tent might only have one or two draught beers to choose from.

So what’s to be done? The only thing on which some of The Local’s readers and the Wharton students agree is that there could be more variety and innovation - German beer is “good but boring”, as one of the former put it.

Not too surprisingly, the business students also suggest developing strong global brands and a corresponding export push. However, given that they note elsewhere how much of the industry is already in the hands of multinationals - including five of those six Oktoberfest brewers, by the way - and that there "may be over-capacity", it’s not clear to me how much that would benefit the real locals.

Oddly though, they fail to mention the role of the consumer and consumer groups in building awareness and interest, and also in combating Germany’s endemic price-sensitivity. This is a country which expects its beer to be both 'pure’ and cheap - as little as €1 or even €0.50 a litre in the supermarket (though €2/l is more typical). Sadly, low price also means it is often perceived as a low-end drink - hence the Oktoberfest focus on quantity over variety, and the guys I see toting whole crates of generic Pils out of the Getr√§nkemarkt.

Hat-tip to Tandleman for a couple of the links.

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