Credit? No thank you!

You don’t often hear him talk in public these days. So it was quite a feat to have Mr Schmid explain Augustiner’s philosophy at the recent Bavarian Brewers’ Day. Mr Schmid knows what he is talking about when he talks about beer and brewing. He joined Augustiner in 1970 at the behest of the then owner Rudolf Wagner who was turning 94 and thought he needed some help with running a brewery.

Longevity may be one of the remarkable features of Augustiner’s managers. The other one is their longterm-vision. In the 1970s Augustiner was a small brewery, having been destroyed almost completely during World War II. While most of his Munich competitors moved to a greenfield site Mr Schmid decided to maintain the inner city red-brick brewery which has been expanded with such ingenuity that they can brew more than one million hl beer there annually and even produce their own malt.

Augustiner has always been a bit of an oddity. When German brewers switched to a new generic returnable beer bottle, Mr Schmid thought, “what the hell, we continue using the old brown Euro bottle.” It saved them lots of money. Needless to add that they do not package their beer in cans or non-returnable bottles.

Augustiner is also famous for not doing any advertising. But they are shrewd marketers. Over the years they have bought up listed property in Munich and installed beer restaurants inside. Today Augustiner owns more than 60 beer restaurants in Munich alone.

Good beer and good food at affordable prices – that’s what Augustiner is famous for. Augustiner’s restaurants are run very much along the lines of a franchise business in the sense that the brewery tells the tenants what kind of food they have to offer and at what price. In exchange their tenants probably pay a low rent and get the beer at a good price.

Mr Schmid still takes an active interest in the interior design of Augustiner’s restaurants. Corporate managers would be running away screaming if their CEO started interfering with their work and told them which pictures to put up on the walls of the restaurants or what colour table cloth they should chose. Not so at Augustiner. Mr Schmid is the boss and he knows what beer drinkers want.

All Augustiner restaurants are done in a certain retro style reminiscent of the 19th century Munich beer halls, with their wood panelling and non-upholstered chairs. But a lot of stuff used for kitting out new restaurants is authentic. As Mr Schmid remembers: “We had these metal columns knocking around in our basement.” At other breweries they would go for a spring cleaning when their basements or attics are full of junk. At Augustiner, it seems, they just open another restaurant.

For Augustiner, these restaurants are like a visiting card. The term “brand identity” would never come across Mr Schmid’s lips. Why should you do any advertising if you run good restaurants?

In Munich, if you want to drink Augustiner beer you go to their restaurants. Munich’s citizens know that the beer will be fresh and the food inexpensive.

Augustiner is predominantly sold in and around Munich as Augustiner, by design, has no sales force to speak of. According to unverifiable hearsay, 8 people work in sales. When some years ago a Berlin distributor sent his trucks down to Munich to take Augustiner beer back to Berlin, Augustiner’s managers were most upset. “Selling beer in Berlin, where we have no control over the outlets?”

In retrospect, Berlin does not seem to have done them any harm. Bavarian brewers were surprised to learn that Augustiner now even has a beer restaurant right in the centre of Dresden, with the interior design done by … guess who…… Mr Schmid. What on earth possessed him to branch out to Dresden? He would not say. Let’s assume Augustiner, which was founded as a monastery brewery, has seen the light and decided to do a bit of evangelising.

In lieu of advertising Augustiner invests in restaurants. These restaurants help Augustiner sell their beer – how much they would not say – and Munich to stay gemütlich. Mr Schmid is adamant that beer culture is a people’s culture. He believes that as soon as you give Munich’s restaurants over to full commercialisation, Munich will lose her charms and tourism will suffer.

Augustiner is controlled by the Edith-Haberland-Wagner Foundation which holds a 51 percent stake and uses its profits to fund social and cultural projects in Munich. Mr Schmid is the chairman of the foundation for life.