Dry Spell for German Beer
February 3, 2005
Dr. Oetker's beer division, RB Brauholding, plans to restructure, slashing up to 450 jobs.
"The declining beer market and substantial overcapacities make cuts unavoidable," according to RB Brauholding head Ulrich Kallmeyer.
Beer production will be concentrated at the DAB and Schultheiss breweries in Dortmund and Berlin instead of running two large breweries at each location, which Kallmeyer were currently only operating at half capacity. Dr. Oetker plans to invest €50 million ($65 million) in DAB and Schultheiss over the next 12 months. Consumers won't notice a difference as neither Berliner Kindl nor Brinkhoff's beer will disappear from the market.
Dr. Oetker spent years developing its beer division, which finally culminated in the 2004 acquisition of Dortmund beverage company Brau und Brunnen catapulting it to number one in the national beer industry. Along with Radeberger and Jever, RB Braunholding also owns Schöfferhofer Weizen, Clausthaler non-alcoholic beer and Sion Kölsch.
Consumption declining
Germany has around 1,260 breweries, but they've been serving ever less brew to their countrymen and women for decades. In 1976, each German drank an average of 156 liters (41 gallons) -- 23 percent of their entire individual beverage consumption. Brewers saw those levels as immutable, without realizing that lifestyles change, according to beverage sector analyst Rudolf Böhlke from the consultancy Ernst & Young. Things have been going downhill since. In 2003, Germans drank 118 liters per capita, the German Brewers' Association reported.
"German beer has an image problem," said Böhlke. "Beer has the image of being a thirst-quencher and not a luxury article like wine."
Though Germany's stringent German purity law guarantees that all beer made here is high quality, there's no way to really distinguish between brands as there is with wine. Whether in glass or plastic bottles, the quality of the beer itself remains the same.
Cultural value?
The future looks brighter for breweries in guesthouses that produce smaller amounts of beer.
"They have a good image and don't need to cart their beer far," said Uwe Witt of the NGG food, hotel and restaurant trade union. But mid-sized breweries will likely have a tough time, he added. Their capacities are too high to merely serve the regional market, while they aren't big enough to become national players.
Besides, international companies like Heineken, Interbrew and Carlsberg, active on the German market, have upped the ante in terms of competition.
Even if trends are moving towards alcohol-free and mixed drinks, beer does have one thing going for it, Böhnke said: It's part of German culture and Germans have a strong emotional bond to their national beverage.