Germany’s breweries are currently running out of beer bottles. It is true that empties logistics in this country are always tense in the summer months in view of the higher beverage consumption then. “This year, however, threatens to be a particular endurance test,” says Holger Eichele, the general manager of the German Brewers’ Association (DBB).
He points to the increased costs for returnable glass bottles and, above all, the lack of new production due to the loss of glassworks in Russia and Ukraine as suppliers for the European market. Obtaining a replacement is therefore much more difficult than in previous years. “It is even the case that some breweries could not fulfill all orders this year because they ran out of empties on certain days,” says Eichele.
According to DBB, a change in purchasing behavior as a result of the corona pandemic is also having a negative impact on the industry. “Returning empties is slower because many customers go to supermarkets and beverage stores less often than before,” explains Eichele. “Our urgent appeal to consumers: Please bring your empties back to the retailer as soon as possible.” This is the only way the circulatory system can still function.
But a number of breweries no longer want to rely solely on such appeals. They are now demanding a higher deposit, for example, so that consumers can return crates and bottles more quickly and, at the same time, deposit collectors have more interest in collecting beer bottles in public spaces. The deposit rate is currently eight cents per beer bottle, and the rental fee for crates is 1.50 euros. For the classic frame with 20 half-liter bottles, a deposit of 3.10 euros is due.
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According to Roland Demleitner, however, this is no longer in proportion to the costs for the breweries. “The purchase price for new bottles and crates now exceeds the deposit many times over,” says the managing director of the Association of Private Breweries. “If the empties are not returned, breweries have to buy new bottles and are therefore left with this shortfall. This is an enormous cost pressure, especially for small and medium-sized providers.”
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Veltins, Krombacher and Co.
Demleitner calculates that buying a new glass bottle will cost up to 20 cents and between 5.50 and 7.50 euros for new crates. “The gap between the deposit price and the replacement value is getting bigger and bigger.” There is no way around increasing the deposit.
And this required increase should be drastic. This is shown by statements by Sebastian Priller, head of the Augsburg Riegele brewery, which is also known nationwide for its Spezi mixed drink. He advocates a deposit of ten euros per crate of 20 glass bottles, with five euros for the container and 25 cents for each bottle.
“Discussion about increasing the deposit rate completely out of place”
He gets support primarily from small and medium-sized breweries, but also from the soft drink manufacturer Fritz Cola. Such an increase should then take place by reference date regulation, so the deposit rate would increase from a certain date. According to the Brauer-Bund, labeling to distinguish between bottles and crates with a new and old deposit is not possible.
But there are also opponents of a deposit increase in the brewing industry. The big manufacturers in particular reject such a step. “The discussion about increasing the deposit rate is completely out of place,” says Michael Huber, for example, the chief representative of the Sauerland private brewery Veltins.
And Krombacher also reports further need for discussion. “However, the topic is extremely complex and must certainly continue to be discussed intensively,” says the company. From the point of view of Veltins man Huber, there are two arguments against increasing the deposit.
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Firstly, the resulting beer price for consumers. “It would send the completely wrong signal if, in the current situation with inflation and high prices across the board, consumers had to pay 30 euros for a crate of premium beer including a deposit,” says Huber. “Who would want to buy beer then?” Especially in the current time everything must be done to ensure that the drink remains affordable.
Second, the entrepreneur points to the financial burden on the industry itself. Huber says that between 85 and 98 percent of all stocks in crates are in circulation and not in the brewery yard. “If they came back after a deadline, some breweries would have to pay tens of millions in order to be able to compensate for the new deposit rates.”
Especially since consumers would also hoard empties as soon as a corresponding deadline became known. The Brauer-Bund recently investigated how great the burden would be. Eichele calculates: “An increase in the deposit rate from the current eight to 15 cents in the future would mean additional expenditure for the breweries totaling 280 million euros for four billion returnable beer bottles in the German market, with a bottle deposit of 25 cents it would even be 680 million euros.”
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“It’s a completely idiotic approach that doesn’t fit the market at all at this time,” criticizes Veltins boss Huber. The result is that the deposit reserves would have to be increased significantly. Because from a balance sheet point of view, returned returnable bottles are debt. And the higher the deposit, the higher this sum. “But the balance sheets of many breweries are already catastrophic in some cases,” warns Huber.
A number of companies are threatened with over-indebtedness, according to the industry. Even without additional deposit millions due, one fears for one’s existence. On the one hand, the Corona crisis led to high consumption losses due to the closed pubs and restaurants, and on the other hand, the sharp rise in costs for energy, raw materials, logistics and personnel as a result of the Ukraine war caused financial burdens.
And the signals from the market are currently anything but positive. The Federal Statistical Office reports that beer sales by German breweries fell to a good 42 million hectoliters in the first half of 2023. The numbers have fallen by almost three percent compared to the same period last year. The already subdued expectations of the industry were once again clearly undercut. For comparison: Only in the Corona year 2021 has less beer been sold in the first half of the year since data collection began.
Industry may have to wait years for recovery
According to the German Brewers’ Association, the main reason, in addition to the cool and mixed weather in spring, is consumer reluctance to buy, which is not only causing problems for retailers, but also for restaurants and breweries.
“Because of the high inflation, more and more people are holding back on spending in restaurants, and the slump in consumption is also leaving its mark on domestic tourism,” says DBB boss Eichele. In his estimation, it will still be years before the currently around 1,500 domestic breweries can hope for a recovery in terms of cost pressure and the economy, especially since the geopolitical risks for the economy have not diminished recently.
Source: Infographic WORLD
Internationally, the situation sometimes looks completely different. The global beer market developed better than expected in 2022. Despite the economic crisis, output grew by 1.3 percent to 1.89 billion hectoliters, according to the recently published Barth-Haas Report 2022/2023, which is published annually by the world‘s largest hop trader from Nuremberg, bearing the same name.
China is by far the largest beer nation in the world, followed by the USA and Brazil. Germany still ranks fifth. Nevertheless, only six German manufacturers are listed among the top 40 breweries worldwide – and only in the lower places. Germany’s industry leader, the Radeberger Group, is only 22nd. The international brewery ranking is led by ABInbev. It is followed by Heineken, China Resources Snow Breweries and Carlsberg and Molson Coors.
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