Boom in Swiss microbreweries could peter out as beer consumption flags

Switzerland | Consumption of locally produced beer is on the rise. There are now more than 1,000 breweries throughout the country. But many observers worry that saturation is imminent as access to taps and shelf space has turned into a scramble.

Switzerland probably holds the world record in terms of breweries per capita. With 1,021 breweries in operation at the end of 2018, the country of 8.4 million people has about one brewery per small town. In terms of turnover, the Swiss brewing industry does not do badly. Official estimates put turnover at more than CHF 1 billion (USD 1 billion). In 2018, domestic beer production stood at 3.6 million hl, of which 51.000 hl were exported.

The abolition of the beer cartel in the 1990s led to the creation of a beer oligopoly, which today is dominated by two international firms: Carlsberg (Feldschlösschen, Cardinal, Gurten, Valais beer, Warteck, Löwenbräu, Hürlimann) and Heineken (Heineken, Eichhof, Ziegelhof, Calanda, Haldengut, Ittinger). Together they have a market share of almost 70 percent, with Heineken alone controlling about 20 percent.

Established regional brewers, especially in the German-speaking part of Switzerland, have a market share of just over 25 percent, whereas all microbreweries combined have no more than 2 percent or 3 percent of the market.

The number of microbreweries appears huge, but the reality is that anyone who brews more than 400 litres beer per year is subject to paying excise, which in turn awards them the status of a brewery.

Unlike in other countries, it is fairly easy to obtain a permit for a brewery. Therefore, more than 700 Swiss breweries produce less than 20 hl beer per year. In other words, most Swiss microbrewers are basically glorified hobbyists. If you were to take into account only those that can afford to pay wages, their number could drop to 200 breweries.

In any case, the founding of local breweries has led to a change in tastes. Nowadays many consumers prefer to drink less, but they are willing to pay more for their beer if it has been produced by a local guy.

Two figures illustrate this trend: average beer consumption has dropped to 55 litres (2018) from more than 70 litres in the 1990s, although it picked up 0.7 litres over 2017. And bottom-fermenting lagers have lost their near-monopoly on beer consumption. “Specialties”, including IPAs, Pale Ales, and Stouts, have risen in popularity to account for 18 percent of consumption.

However, if truth be told, the explosion in the number of breweries has not always been accompanied by a commitment to beer quality. Pundits complain that beer quality is getting worse because many start-ups underestimate the knowledge and skills that are required to brew beer.

There is no denying that competition among microbrewers has heated up, as publicans and restaurateurs still prefer to buy cheaper products from large brewery groups, than beer from a local microbrewery. The Big Brewers certainly do their utmost to defend their market share. Although they have lost some of their former grip on the market, the oligopoly of Carlsberg and Heineken continues to tie up bars and restaurants with exclusivity contracts, as they throw refrigerators, beer dispensers, etc. and discounts into the bargain.