Hopfen und Malz, Gott erhalt's; God preserves malt and hops. Culture taken
for granted is no longer in the hands of God. Photo courtesy of World Beer
Cup
Brauwelt International, a German beer industry publication reports Germany’s beer sales have declined almost 7 percent in the first quarter of 2009. This summary and comment is based on a story in their recent English version newsletter.
Brewing groups (companies that own many breweries) are becoming inclined to close some of their breweries. In June Carlsberg confirmed it was in talks over the sale of its Feldschloesschen brewery (Braunschweig) in northern Germany. Rumoured buyers are the German “king of cheap beer”, the Oettinger brewery, and its Belgian counterpart, Martens brewery. Both are privately-owned. Feldschloesschen Brewery lost its independence as a small brewery when it was bought by larger brewing “groups” nine years ago.
In Germany, Carlsberg (a Danish international brewing group/company) currently operates four breweries: the Holsten Brauerei (Hamburg), Mecklenburgische Brauerei Lübz GmbH (Lübz), Feldschloesschen Brauerei (Braunschweig) and Feldschloesschen Aktiengesellschaft (Dresden).
Oettinger is Germany’ s most controversial brewery on accounts of its business model, which relies on the production of economy and own-label brands only for German supermarkets and discount chains.
Oettinger does not do any advertising. Its beers are delivered directly to the supermarkets by its fleet of trucks. Which make brewery locations and their proximity to major German retail markets central to Oettinger’s business efficiencies. Direct from brewery to retailer is an issue that will arise in the United States if large international brewers wish to seek additional profits by bypassing the wholesaler/distribution system.
Oettinger is a privately-owned brewery with 1,100 employees. With a beer output of over 8 million hectoliters in 2008, of which 6.6 million hl were sold in Germany alone, and revenues of EUR 420 million (all figures by its own account), Oettinger is one of the major brewing groups in Germany. Comparatively a small, independent American brewery producing 40,000 barrels (47,000 hl) will have about 40 employees. Oettinger employee:hectoliter ratio is 1:7000. Small U.S. independent 47,000 hl size packaging brewery ratio is 1:1175.
Photo above right: Large modern brewhouse efficiencies can enable budget prices for budget beer. Photo courtesy World Beer Cup.
Although Germany’ s beer market is expected to decline this year, Oettinger says it hopes to raise output 5 percent. It was reported that economy brands now retail at half the price of premium brands
One can only wonder if this is what is in store for the American beer culture if large international brewing companies/groups were ever to totally dominate the U.S. beer market. One also has to wonder what would happen if small brewers were undermined by economic pressures, increased state and federal excise taxes.
One thing for certain is that it would be bad news for American beer drinkers if we aspired to what is now going down in Germany.
For more background on the declining German beer market and culture see:
Trouble in Deutschland part 1 - German beer culture in doubt
Trouble in Deutschland part 2 – German beer quality unsurpassed
Trouble in Deutschland part 3 - No beer no joy
Comments
"Direct from brewery to retailer is an issue that will arise in the United States if large international brewers wish to seek additional profits by bypassing the wholesaler/distribution system."
Could the now international AB-Inbev push to dismantle the three-tier distribution structure in the US? Could this be a blessing in disguise for the craft brewing industry or the return of tied houses?
"Dismantling of the 3-tier system... a blessing in disguise..." I don't think so. That would be devastating to small brewers who depend on independent distributors to get their beer to beer drinkers. Tied house free for all systems have been disastrous for small brewers everywhere in the world. Not a good thing, historically speaking.
There is good & bad on the three tier system as I see it as an outsider. But the distributor can really hamper what is ordered and put on the shelves, especially here in St. Louis where the "King of Beers" rules the marketplace with a heavy hand. But I see the otherside where a small brewer doesn't have the resources to get their beer out. If the three tier system is dismantled then AB or other dominant players can pull all the stops out and take over more shelf space by making the beer cheaper and more profitable for the stores to drive off the competition from the shelves. No three tier system, no need to make nuances to skirt too much self interest business practices. They would go all in, fortunately the craft beer movement is stronger that 15 years ago, but if there was no three tier then, it would have been buried in my opinion. Hence I keep my day job and support craft brewers.
The Feldschloesschen brewery, actually located just outside of Basil Switzerland, is one of the most beautiful breweries I have ever toured. It would be a crying shame if this brewery was allowed to be run into the ground. They clearly take a great deal of pride in the brewery and the resultant beer seems to reflect this.
I am a cigarette distributor who is just getting into the beer distributorship. The three tier distribution works well for cigarettes because we still apply tax stamps, report all sales electronically, and regulate the industry for the state. It seems beer taxes will be an important source of income soon, and the states will need tighter regulation not less. We are selling Craft beers and are having a lot of success. We are already selling to Convenience and liquor stores (we also sell snacks, sacks, cups,beverages, etc...).Since we are new to this business, we are also agressive and excited about our products.
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