Lucrative Carnival season

Carnival in Germany mobilizes millions of people who spend billions of euros every year.

The celebration, often referred to as "the fifth season" because of its huge economic clout, differs commercially from other events like Halloween where people also wear costumes but spend far less, according to Jan Wieseke, an economics professor at Ruhr University in Bochum.

The Carnival season generates annual revenues of almost 2 billion euros ($2.7 billion), according to data provided by the German Carnival Association (BDK), which has 2.6 million enthusiasts organized in some 4,700 clubs.

But it's not only these groups that are in a spending mood during the days of what many call "complete madness." Carnival bastions such as Cologne, Düsseldorf and Mainz attract millions of visitors to the delight of hotels and catering businesses. Carnival tourism alone generates three-digit-million-euro revenue, according to Wieseke. "And there's still a big growth potential," he says.

Local tax rising

In Cologne alone, Carnival generates average revenues of more than 460 million euros, 165 million of which come from catering and lodging. Antoher 85 million euros come from costume sales. The city and surrounding communities pocket about 5 million euros in additional local business tax - all within a few weeks.

Carnival also creates demand for sweets, benefitting companies in other German states such as Lower Saxony or Brandenburg. During Cologne's Shrove Monday (Rosenmontag) procession, 330 tons of candy, 700,000 chocolate bars and 220,000 chocolate boxes are thrown into the masses lining the streets. In neighboring Düsseldorf, 45 tons of sweets are distributed along the parade route.

Carnival safeguards jobs

The Carnival season is an important sales event for numerous groups, according to Wieseke. For some niche players like costume makers, the event is critical, he says, "and for beverage producers, it's also quite important."

In fact, some 3,000 firms with more than 40,000 employees rely completely on Carnival sales. "The season is long, and so is the preparatory stage," Wieseke says. "There are only few months without Carnival, so for many firms in the business, it's more like an all-year-round event."

Not just three mad days

Take the Keller company from Bochum, which has supplied enthusiasts with costumes and accessories for more 25 years.

CEO Horst Krokowski says Carnival is an event that keeps companies on its toes not just for just three days, but actually the entire year with purchasing, ordering and selling tasks.

For this season, Krokowski has more than 1,000 items on offer. His company has managed to generate gross sales of 20 million euros from the sale of more than a million items even before Shrove Monday festivities have started.

What also helps keep Krokowski's firm afloat is that Carnival isn't limited to the Rhineland. The company has sales in other German states, including the city state of Berlin.

German retailers generate more than 300 million euros in annual sales from costumes, hats, wigs and make-up kits. Sales are strongest in Germany's most populous state, North Rhine Westphalia, followed by Bavaria and Baden-Württemberg.

The Carnival business is brisk and not subject to cyclical developments, says Krokowski, pointing out a unique economic feature of the annual event: When Carnival enthusiasts are doing well economically, they want to celebrate, and if they aren't doing so well, they want to celebrate anyway.

As an industry, Carnival still has huge growth potential despite its annual multi-billion sales, according to Wieseke. The economist notes that Carnival organizers have always dealt with traditions in a rather unorthodox way. As a result, new target groups could emerge in the future that no one was having on the radar today.