On-premise beer sales could shrink by more than half in 2020

Germany | With beer sales down 13 percent in May over May 2019, German brewers are fearing for the worst. Acting like a Cassandra, Bitburger’s Managing Director Axel Dahm drew a grim picture for beer sales in the on-premise.

Although Germany’s 1500 or so breweries achieve only 20 percent of their volume sales in the on-premise, it is here that they make nearly all of their profits. If Mr Dahm’s forecast of a 50 percent to 80 percent decline in 2020 on-premise beer sales becomes true, many breweries could find their balance sheets spilling red ink.

Making matters worse, a 2 percent to 3 percent hike in off-premise sales will not be enough to compensate brewers for their losses in the on-premise, Mr Dahm fears. He also expects that at home consumption will continue to rise slightly.

On-premise beer consumption to remain low

At Bitburger, Germany’s major draught beer supplier (more than 900,000 hl in 2019), they believe that even after the worst of the pandemic is over, beer consumption in the on-premise, as well as at festivals, may only reach 80 percent of previous levels, at best. Therefore, Mr Dahm worries that 30 percent of pubs, many of them tenanted, will not make it through the current crisis.

The fourth-largest German brewing group (6.5 million hl beer sales in 2019) expects to weather the storm by rejigging its portfolio to focus on national brands like Bitburger, Benediktiner, a wheat beer, and Köstritzer, a black beer. The other brands in the portfolio (König Pilsener, Licher, Wernesgrüner) will henceforth concentrate on their respective regional strongholds.

According to Mr Dahm, Bitburger doesn’t plan to close any breweries. However, there will be redundancies. In the interview with FAZ, a national daily, Bitburger’s helmsman said that his company “unfortunately cannot completely avoid dismissals”. Bitburger Brewing Group employs 1,700 people.

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