Consumer behavior in the craft beer industry – a threat for Germany?

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In the late 20th century, the beer industry in the US was consolidated with a few macro-breweries dominating the market. The majority of American consumers drank light lagers with little interest in imported beer from Europe due to effective marketing campaigns from large output breweries. However, during the early 21st century, the craft beer segment of the market began to increase as US consumers interest in high quality beer began to rise. Between 2004 and 2008, the craft segment grew by 6% to 12% annually due to the growth of independent and local breweries. 

Today, 4% of US beer sales are from craft breweries, however, it is still tremendous growth. In 2013, there was a recorded 1,500 breweries in development in the US. In 1980 there were only 537. According to Fortune magazine, the “craft beer boom” is not slowing down. The Brewers Association showed that production increased 16% in 2015. Therefore, one can observe that U.S. consumers’ preference is shifting away from light lagers to high quality craft beer. The Beer Institute study also announced that the beer industry has contributed $252.6 billion to the US economy. As for craft brewers, in the first half of 2015, they sold 12.2 million barrels of beer according to Fortune magazine. Even consumers in Europe have shifted their preference toward craft beer. Craft beer is gaining popularity in Scotland, Denmark and Belgium.

One would assume craft beer would also be growing popularity in Germany as well. Germany has a rich history of producing beer over thousands of years and it is deeply rooted in their culture. However, breweries find themselves restricted too old traditions and are unable to create innovative beers. A popular tradition is the Reinheitsgebot or the beer purity law. The beer purity law is 500 years old and specifies which ingredients are allowed to produce beer and this law is holding back Germany’s craft beer scene. A well-known craft beer brewery in southern Germany, Camba Bavaria, has been criticized for brewing outside the limits of the purity law. Additionally, small microbreweries in Berlin call their craft beer Malzgetränke,”Malty Drinks”, in order to experiment and avoid violating the Reinheitsgebot.

German’s strict beer traditions may be a reason why beer sales have been declining in Germany. In 2001, 10.7 billion liters were sold, while in 9.57 were sold in 2015 according to Germany’s Federal Statistics Office. Additionally, according to Euromonitor, beer consumption is expected to continue to decline as regional traditional beer become less popular for consumers. Larger breweries in Germany are now seeking new markets in China and India in order to protect profits, using Germany’s purity law as a marketing tool.

Is consumer preference in Germany shifting towards craft beer as it is in the U.S.? Germany’s purity law might be a very large reason for the decline in beer consumption in Germany due to its strict tradition. As in the wine industry, Germany might have to make adjustments to its 500 year tradition in order to increase the profitability of its’ beer market. In the US, craft brewers produced one out of every 10 beers sold. Additionally, It has been reported that U.S. beers have already been exported to 10 million people worldwide in 2015, according to the Belgian brewers, a trade group. Craft beer already gained popularity in other European countries and foreign beer producers could quickly threaten traditional breweries in Germany as consumer preferences shift

Sources:

http://fortune.com/2015/08/05/beer-industry-craft-beer/

https://www.pri.org/stories/germany-creative-craft-brewers-face-against-medieval-purity-law

http://www.usatoday.com/story/news/world/2016/08/04/american-brewers-hop-into-europes-craft-beer-heartland/87931840/

History of Craft Brewing

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