Independent Breweries in a Changing Germany

Traditional Breweries Take Stock

by Herbert Latz-Weber

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By any measure, Germany is a giant among brewing nations. It is the birthplace of more than a dozen distinct beer styles, the home of the Purity Law of 1516 (the Reinheitsgebot) that dictates the acceptable ingredients for beer, and the host to too many beer festivals to count. It is near the top of the international list for beer production, numbers of breweries, and per capita consumption of beer. It sounds like a brewer's paradise.

Introduction • Changing Taste of German Drinkers
• The Big Breweries Respond • The “Top Position” Looses Out
• Dreams in Alt • Foreign Beers on the Market

• Bottling His Passions • Traditional Brewing for the 21st Century
• The Independents—Pulled by Modern Forces

GERMAN IMPORTERS IN THE US

et German beer drinkers' tastes and drinking habits are gradually changing, and the shape of the German beer industry has altered significantly in the last several years (see Table I: The German Brewing Industry 1993 and 1998). And the independent brewer, sandwiched between the purely local gasthausbrauereien (brewpubs) and the well-heeled conglomerates, may feel the pinch most keenly.

German beer drinkers still prefer German beer (Table II: Favorite Beer Styles 1998), with pilsner topping the list. But almost every measure of the beer industry shows a decline: personal consumption is down, the number of breweries has fallen, total production is down, total sales and tax revenue have slipped. Altogether, there are 220,000 jobs in the German beer industry—44,000 of them in the breweries themselves. The total turnover of the beer industry nears 19 billion Deutsch marks (over US$10 billion), so changes in this vital sector are watched closely.

Not surprisingly, there are great differences within Germany, in beer as in other things. Beer sales grew by a couple of percentage points in several of the 16 Länder (states) that comprise the Federal Republic: Saxony-Anhalt, Saxony, Thuringia (former East German states); and Rheinland Pfaltz and Saarland in the west. And even with declines, Bavaria continues to lead the world in per capita consumption of beer. But the overall projections point down.

In a few years, the total number of breweries fell from 1,311 to 1,283 (with 696 of them in Bavaria), but the decrease fell unequally on different sectors of the German brewing establishment. Pubbreweries (with production up to 5,000 hl) have in fact been increasing. This is the only sector of the industry that is seeing newcomers entering the market.

At the other end of the scale are the large breweries and brewery groups: the 30 companies that produce more than 1 million hl each of beer per year. The biggest is Warsteiner, with 5.2 million; the biggest brewery group is the Binding Group. These 30 dominate three-quarters of the German beer market. (It's an interesting contrast with the United States, where only three companies—Anheuser-Busch, Miller, and Coors—dominate an even larger share of the market.) This group, Germany's "big brewers," have held relatively constant in the market.

Caught in the middle are the family-owned independent breweries. They are too large to survive by brewing only for a local market, like the gasthausbrauereien that brew only what they serve, but too small and provincial to afford the marketing and distribution networks of the national breweries. Without friendly bankers and a unique niche, many face closure.

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NEXT: Changing Taste of German Drinkers

This story originally appeared in All About Beer Magazine in November 1999.