Cheap German beer on the rise - craft beer in decline

July 9, 8:44 AMBeer ExaminerCharlie Papazian

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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