Cost pressure continues to weigh on the German brewing industry

Germany | German brewers will need to raise prices. But with so much budget beer sloshing around – will they be able to push price hikes through?

According to a poll by the German Brewers’ Association (DBB), it was not just the cost of gas and electricity which has skyrocketed in 2022. All input costs were up over 2021.

Malt and packaging materials, in particular, have also become far more expensive. CO2, the price of which had almost doubled, was temporarily unavailable, so that in 2022, several breweries and beverage manufacturers were forced to cease production. Since then, however, the situation has eased considerably.

“Inflation puts the economy under high pressure. It is to be feared that input costs will remain at a high level in 2023 and, in some cases, will even continue to rise,” said Holger Eichele, Managing Director of the DBB. The persistently high cost pressure will remain the biggest challenge for the brewing industry this year, apart from maintaining a secure and affordable energy supply.

Beer prices will need to go up

Above all, sharply rising prices for raw materials and intermediate products as well as wage increases and logistics costs will continue to affect companies negatively. This will also have an impact on beer prices, according to the DBB's forecast. Numerous breweries in Germany are facing an extremely difficult financial year and have already announced price increases for 2023.

But brewers have warned that if they were to push cost increases through to consumers, the price of beer (500 ml) could rise to EUR 7.50, from currently EUR 5.00 or less, in the on-premise.

According to the DBB, the industry has proven remarkably resilient in recent years. “Many breweries could learn from the corona crisis, even if today’s challenges are on a much larger scale,” said Mr Eichele. “We have been operating in a permanent crisis mode for almost three years now. Cost increases and unexpected bottlenecks in supply chains have been with us since the beginning of the pandemic. Russia’s invasion of Ukraine, in violation of international law, has further exacerbated the problems. Today, however, the brewing industry is much more resilient than it used to be.”

2022 beer sales up 3.2 percent

For the eleven months of 2022 (January to November), the German brewing industry registered sales of 81.2 million hl beer (excluding non-alcoholic beer), up 3.2 percent over the same period 2021. Although this is a positive signal, German beer production has not yet reached pre-pandemic levels. In the eleven months of 2019, beer sales stood at 85.2 million hl.