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Tuesday, January 18, 2022

Germany. Breweries are announcing increases in beer prices

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

– All these increases take place simultaneously, something like this has never happened before. Problems arise throughout the supply chain, logistics processes are disrupted, says Peter Peschmann, technical director of the Veltins brewery.


Higher beer prices and barrel transport

He adds that the company needs nearly 800,000 jobs each year. wooden pallets, needed for transporting barrels and boxes of beer. He estimates that this year alone, the additional costs caused by the increase in pallet prices amount to nearly EUR 1.5 million. Before the pandemic, the price of a classic Euro pallet was around 7 euros apiece, now it is more than twice as much, due to the sharp rise in the price of lumber and disruptions in the supply chains.

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– Veltins, despite the fact that it uses the open exchange pool of euro-pallets, needs approx. 180 thousand. new pallets to ensure perfect service. The Euro pallet as a standard component in the entire reusable cycle has become an expensive commodity, explains Peschmann.

As he adds, the topic of the increase in production costs will be raised by producers soon, because at the end of the year there are so-called annual talks with retailers, during which the terms of delivery for the next twelve months will be negotiated with supermarkets, discounters and hypermarkets.

Beer and the prices of energy and raw materials

Peschmann points out that the pallet problems are “just one of the craziest changes in the cost avalanche that is overwhelming the industry this year,” highlighting simultaneous increases in energy prices, the cost of raw materials such as brewing barley and malt, packaging and cork shipping.

In addition to Veltins, price increases are also mentioned by other beer producers, such as Krombacher, Bitburger or the German brewing group Radeberger, which includes over 80 beer brands. In addition to market giants, the increases are 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 large events (festivals, concerts, matches, etc.). “Several breweries had problems with beer kegs with a shelf life of less than a year. In some cases, breweries were forced to destroy a large part of their production,” adds Die Welt.

The pandemic caused an increase in the sale of bottled beer, for months the only sales channels remained supermarkets and discounters.

Beer production in EuropePAP

Beer sales drop

When it comes to total beer sales, there was a “historic drop in sales” of 5.5 percent to just over 87 million hectoliters, according to the German Brewers Association. Nothing indicates that the situation will improve in 2021 – according to the Federal Statistical Office, a 3.9% decrease was recorded by the end of September. compared to the already weak last year. “What’s more, bottled beer does not earn as much as a high-margin draft beer” – emphasizes “Die Welt”.

Representatives of the Radeberger brewery say about huge losses in sales and profits for 18 months of the pandemic. – It is no longer possible to compensate for the costs with a simple increase in efficiency, we are only left with price increases, especially since the last took place in 2018 – explains a spokeswoman for Radeberger.

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

Main photo source: Shutterstock

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