January 19, 2022

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Germany.  Breweries announce increases in beer prices

Germany. Breweries announce increases in beer prices

Both giants of the German brewing industry and local beer producers have announced increases. They explain the increase in costs by the simultaneous increase in prices for raw materials for production (fermentation of barley and malt), energy, transportation and packaging. Even wooden pallets for transporting beer have more than doubled, according to Die Welt listings.

– All these increases are happening simultaneously, something like this has never happened before. Problems appear throughout the supply chain, and logistics are disrupted, says Peter Beschmann, technical director of the brewery Veltins.

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Rising beer prices and barrel transport

He adds that the company needs approximately 800,000 jobs each year. Wooden pallets needed to transport kegs and beer crates. The additional costs for this year alone due to the increase in pallet prices are estimated to be approximately 1.5 million euros. Before the pandemic, the price of a classic euro pallet was around 7 euros a piece, and now it is more than double that price, due to the sharp rise in timber prices and disruptions in supply chains.

– Veltins, although they use the open exchange platform from Euro pallets, needs about 180 thousand. New pallets to ensure perfect service. Peschmann explains that the euro pallet as a standard component of the entire reusable cycle has become an expensive commodity.

He also adds, the issue of increasing production costs will soon be brought up by producers, because at the end of the year there are so-called annual talks with retailers, during which delivery terms for the next twelve months will be negotiated with supermarkets, discount stores and supermarkets.

Beer, energy and raw materials prices

Peschmann notes that the pallet problems are “one of the craziest changes in the cost avalanche sweeping the industry this year,” highlighting simultaneous increases in energy prices and the cost of raw materials such as malt and barley fermentation, packaging and cork. Shipping.

In addition to Veltins, price increases have also been mentioned by other beer producers, such as Krombacher, Bitburger or the German brewing group Radeberger, which includes more than 80 beer brands. In addition to the market giants, increases were also mentioned by smaller local breweries.

As “Die Welt” emphasizes, breweries are among the biggest losers during the pandemic due to the gastronomy industry that has been closed for months and the lack of big events (festivals, concerts, matches, etc.). Adds Die Welt: “Many breweries have had problems with kegs of beer that have a shelf life of less than a year. In some cases, breweries have had to destroy much of their production.”

The epidemic caused an increase in bottled beer sales, as supermarkets and discount stores remained the only sales channels for months.

beer production in europeDoor

Beer sales decline

When it comes to total beer sales, there has been a “historic drop in sales” of 5.5 percent to just over 87 million hectoliters, according to the German Beer Association. Nothing indicates an improvement in the situation in 2021 – according to the Federal Statistical Office, by the end of September there was a 3.9% decrease. Compared to last year already weak. “What’s more, bottled beer doesn’t earn as much as high-margin beer” – emphasizes Die Welt.

Radeberger brewery representatives are talking about huge losses in sales and profits for the 18 months of the pandemic. – The costs can no longer be offset by a small increase in efficiency, and we are left with only price increases, especially since the most recent occurred in 2018 – explains a spokeswoman for Radeberger.

As announced by the breweries, customers can expect increases in the spring: from April (Krumbacher and Veltins) and from May (Radeberger, Pitburger), they will apply to both retail and gastronomy. According to the advertisements of some breweries, the price of one can of beer (20 bottles) may increase by about 1 euro. In the case of beer, the price increase may be higher – even by 0.30-0.50 euros more for a glass of beer in a bar or restaurant.

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