The German Beer Crisis With Brewery Closures, Germany Faces Brauereisterben

Germany and beer have long been synonymous. But that is changing. With Monday's closing of two large breweries, the crisis facing the industry appears to be deepening. An aging population is partly to blame. But beer, as it turns out, just isn't cool anymore.


A nice mug of beer has long been part of a balanced German diet. That is rapidly changing, however.

A nice mug of beer has long been part of a balanced German diet. That is rapidly changing, however.

The threatening new word made its appearance on the German media stage in the mid-1990s. Brauereisterben. Dubbed after the term for Germany's dying forests, the word predicted the decline of the nation's breweries. The frothy favorite of thirsty Germans, the beer brewing industry started warning 10 years ago, was heading for a crisis. More and more beer-swilling Teutons seemed to be turning away from hops and malt and towards a healthier lifestyle of designer water and juice. To traditionalists in Germany and abroad, for whom the words "Germany" and "beer" belong together like sauerkraut and bratwurst, it's a horror come true.

As it turns out, the fear-mongerers were right.

On Monday, two large German breweries bit the dust. The Oetker Group, one of Germany's largest producers of beer, announced the closing of the 133-year-old Berliner Kindl brew factory in Berlin and the Brinkhoff Brewery in the western German city of Dortmund. Total jobs lost: 450. More ominously, experts in the brewing industry say the closures, just the most recent in an ongoing downward trend within one of Germany's highest profile industries are unlikely to be the last.

"There are many negative trends," warns Stefan Leppin, spokesman for the Radeberger Group, a major brewing operation also owned by Oetker. "We assume that consumption of beer in Germany will continue to drop and that the market will continue to consolidate. The German beer market is, on the whole, oversaturated by at least 30 percent."

German youth is opting for sweet-tasting alcopops over beer.

German youth is opting for sweet-tasting alcopops over beer.

That's right. Germans aren't imbibing enough of the drink that most of the world assumes flows out of the kitchen tap in most German households. More and more Germans are turning away from beer and more and more breweries are closing, cutting jobs or they are being sold to large, global brewing conglomerates like InBev (the company resulting from the recent merger of Belgium's Interbrew and the American Beverage Corporation) or the Heineken group. Whereas in 1994, Germans consumed 108 million hectoliters, by 2003 that number had dropped to under 94 million, according to the German Federal Statistical Office. The amount of frothy beverage each German is drinking each year is likewise shrinking quickly. In 1996, Germans still subscribed to the theory that a pint per day keeps the doctor away -- each person in the country threw back a healthy 131.9 liters that year according to the Association of German Beer Brewers. By 2004, per capita beer consumption had dropped to just 116.1 liters.

Beer is uncool

Even more worrisome for Germany's beer producers is the fact that beer is falling out of vogue with the country's teens and twentysomethings. Instead, Germany's youth, many of them under the legal drinking age of 18 (beer and wine are legal for 16-year-olds), are flocking to so-called "alcopops," alcoholic mixed drinks like Smirnoff Ice or Bacardi Rigo that often contain higher percentages of alcohol than beer but contain enough sugar and juices to completely disguise the taste of alcohol. Sales of alcopops have exploded in Germany since 2001. A tax on the drinks imposed in August 2004 to make them less attractive to young drinkers has put a dent in turnover, but they are still a major force.

"(Alcopops) taste really good and it is cooler to be seen with a bottle of Rigo than with a bottle of beer," 17-year-old Hendrikers of Frankfurt told the daily Frankfurter Rundschau. "The image of Rigo is much cooler and the bottles look better," he added saying he really doesn't like beer much.

Beer bellies are decidedly out of fashion in Germany.

Beer bellies are decidedly out of fashion in Germany.

The problem of a slowly disappearing desire for traditional tipple isn't just confined to Germany. France has also seen a drastic drop in wine consumption, with close to 500 vintners facing extinction in a country whose national identity is closely wrapped up in rolling hills covered with grapevines. The long decline -- the French drink only 13 gallons of wine per capita annually compared to more than double that in the 1960s -- means that by 2008, France will no longer be the world's leader in wine drinking.

In both countries, say analysts, the change can partially be laid at the door of intense government campaigns warning citizens of the dangers of drinking and driving and over-consumption. An increased emphasis on healthy lifestyles and fitness has also played a big role, especially in Germany. Beer, most believe, makes you fat and the beer belly is decidedly out.

Going to the juice bar instead of the corner bar

"An unholy alliance of health ministers is trying to squeeze the last bit of pleasure out of people," complains Peter Hahn, the chief executive of the Association of German Beer Brewers. "Moderate beer consumption is a part of our culture and of our life and gives us our desire to live."

But whereas the desire to live is being found by more and more people in the gym or the juice bar, the biggest problem facing the industry is demographics. Germany and Europe, famously, are both getting older quickly and the elderly, say both Hahn and Leppin, drink less beer. With a birth rate of just 1.4 children born to each German woman and no end to Germany's population shrinkage in sight, breweries may be in serious trouble. This development is further compounded by a struggling German economy which leads Germans to spend their evenings at home in front of the television rather than at the corner pub. In a very real sense, the beer industry is German society's litmus paper; the problems facing Germany can be read in the ever falling consumption of golden suds.

Even with less beer being consumed annually in Germany, Oktoberfest is still the country's claim to fame abroad.

Even with less beer being consumed annually in Germany, Oktoberfest is still the country's claim to fame abroad.

German beer brewers are not standing idly by. Even as many of the country's over 1,260 breweries (representing more than three-quarters of the European total) are being sold to international consortiums -- more than two dozen German breweries changed hands in 2004 and the trend is likely to accelerate -- many more are looking at trying to make their products more attractive to young consumers. Beer mixtures are slowly becoming more popular and packaging is gradually moving away from the staid brown bottle. Indeed, the brewer's association is doing what they can to help beer makers improve on the drink's stody image. Forums, congresses and conventions on topics ranging from the length of a beer-bottle's neck to improving marketing to highlight the two-year difference in the drinking age between beer and harder drinks are the order of the day. But, says Hahn, there is only so much that can be done.

"The young don't really want to have the same drink that their grandfathers and fathers drink. They want something peppier," he says. "We exchange a lot of ideas as to how to improve the situation but, in the end, it is up to the individual breweries to go through the doors we open."


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