Beer consumption in the home of some of the most-loved beer brands in the world is continuing to drop, according to official statistics released this week. Beverage makers are turning to experimental alternatives.
Germans just don't drink as much beer as they used to
The statistics are a tragedy for beer-lovers - for the first time since German reunification in 1990, annual German beer sales dropped below 100 million hectoliters.
The Federal Statistics Office released the depressing data on Thursday: German breweries sold 98.3 million hectoliters of beer in 2010, 1.7 percent less than in 2009.
Even more demoralizing, domestic consumption went down by even more. Beer turnover in Germany sank by 2.9 percent to 83.4 million hectolitres - only 101.8 liters per person.
But Marc-Oliver Huhnholz, spokesperson for the Association of German Brewers (DBB), said German demographics made the decline inevitable.
"There's a very simple explanation," he told Deutsche Welle. "The socio-demographic development in Germany is the way it is, and it means that for the last 30 years and more, the beer market has shrunk by between one and two percent every year. So with this year's fall of 1.7 percent, we're in the normal range."
Non-alcoholic beer represents only a tiny fraction of the market
The message might fly in the face of regular newspaper reports about binge-drinking, but Germany's aging population means less beer, and less alcohol in general, is being consumed.
"The number of German beer-drinkers is going down, and in the last ten years, another 500,000 weren't born - so to speak – who could take their place," Huhnholz added. "Meanwhile, the older age groups – who used to drink a lot of beer – have got older, are working less and drinking less."
There is a definite general trend from alcoholic drinks to non-alcoholic drinks, Huhnholz claimed, and since more beer is drunk than any other alcoholic drink, the statistical effect is more noticeable with beer.
"Consumer habits and lifestyles have changed," he said.
"That means people are drinking more coffee, more tea, more water. More people are working at a desk, which means they drink totally different things. It's not like in Britain, for instance, where the after-work beer is still part of the working day. Family fathers used to go to a bar after work, but that doesn't happen any more."
But Horst Zocher, a beer market specialist for the market research association GfK, is less inclined to see changing lifestyles as the decisive factor.
"I don't think it has much to do with work habits – it might play a little bit of a role, but I think it is minor," he said, and added that the aging demographic is the single biggest factor.
"It might be true that people are drinking more consciously, but that's not the reason why the beer market is declining."
There is an unprecedented range of alcoholic drinks to choose from
Zocher says that breweries are pushing the range of alcoholic drinks to further extremes to counter this and appeal to a younger market.
"The breweries are realizing that they're not reaching enough young consumers with the classic beers, so they're trying it with mixed drink variations," he said.
"That can be successful, but you have to throw a whole new brand concept onto the market – you have to create your own product that has to be advertised – that's expensive, and it can be a risk."
Hard times for hard drinks
But as much as has been written about all the variations on alcoholic beverages available to the young consumer, they still represent a very slight sliver of the pie. Huhnholz says that gaudy cans of cola-beer or non-alcoholic beer can do little more than cushion the fall of the beer market.
"There are rising costs, the market is shrinking, there are strong price competitions in retail outlets – all this is putting pressure on the industry," he said.
"But beer-mix drinks, for example, only represent about 4 percent of the beer market, and non-alcoholic beer represents 2.9 percent, so you shouldn't exaggerate their influence."
The competition is tough and getting tougher. There are 1,327 breweries in Germany that offer over 5,000 types of beer. The cost of malting barley, the most vital raw ingredient in beer, is constantly rising.
"On top of this we have rising energy, logistics and operational costs," noted Huhnholz. "It could lead some breweries to consider their futures."
Barley costs are rising because supply is being squeezed - partly because farmers are increasingly moving into government-subsidized bio-fuel crops.
Nevertheless, Huhnholz is confident that beer prices will stay steady, because beer works so well as a loss leader in many supermarkets.
"I wouldn't say that beer will definitely get more expensive," he said. "I think it will still be on sale at reasonable prices for the foreseeable future."
Author: Ben Knight
Editor: Cyrus Farivar