Beer brewers fear a wave of bankruptcies due to the corona crisis

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Dusseldorf “It’s a nightmare,” says Peter König, sole owner of the “Im Füchschen” brewery in Düsseldorf’s old town. He hasn’t had a draft beer in two weeks, and the 1848 cult brewery had to close due to the corona crisis.

Otherwise, when the weather is fine, hundreds of guests stand in front of the “Füchschen” on Ratinger Strasse in the evening. Now the beer barrels are stacked up in the cellar at König. “I’ll probably have to pour it away. Because who is currently buying a ten liter barrel where fairs, soccer games, shooting and barbecues are prohibited? ”Asks the entrepreneur. His bottled beer for retail accounts for just eight percent of sales. He wanted to brew 43,000 hectoliters of Alt beer this year, this month it will be just 400 hectoliters.

König had to send his 123 employees on short-time work. “It was terrible, I was ashamed of it,” says the trained cook and brewer. At the same time, he is grateful to the state because otherwise he could not begin to shoulder the 420,000 euros in personnel costs per month. He is lucky that he can use the family-owned restaurant without renting it. However, the “Füchschen’s Eck” and two warehouses have a monthly rent of 19,000 euros. He has to pay them from reserves.

Most German brewers don’t have a thick financial cushion to endure a long corona crisis. The pandemic will have a dramatic impact on the 1,500 breweries in Germany, the German Brewers Association (DBB) predicts and warns of a bankruptcy wave. “We are experiencing a fatal domino effect: the conflagration in gastronomy is spreading to the brewing industry. Some companies generate 90 percent of their sales through the catering trade. That is now a thing of the past, ”says Holger Eichele, Managing Director of DBB.

The export business is also collapsing due to the global crisis. Ironically, the Corona hotspot Italy was the most important foreign market for German brewers with almost 3.4 million hectoliters of beer in 2019, followed by China with 1.8 million hectoliters. A total of 92 million hectoliters of beer were brewed in Germany, figures from the Federal Statistical Office show. The trend is declining.

Even the cancellation of almost all events from marksmen’s celebrations to weddings and sporting events hits the brewing industry particularly hard. “This brings many breweries to the brink of ruin,” fears Eichele. More than 1100 brewers in this country are small home breweries that produce less than 5000 hectoliters a year. Many of the almost 6000 traditional beers in Germany are now under threat. German beer culture may have lost diversity after the corona crisis.

Many breweries will not survive this crisis without government aid, the brewer’s association fears. The association sees the possible deferral of the beer tax, which totaled 650 million euros in 2019, as an important signal to relieve the industry. Emergency aid is even more necessary, but the sums are often not enough to survive.

After 400 years, the Werneck brewery gives up

This also applies to the Bavarian brewery Werneck, which now gives up after more than 400 years and closes at the end of September. “After the past three years had been on the up again and in 2020 had looked very good with many events, the corona virus put a spanner in the works,” said the Lang family, which employs 15 people.

“We are so incredibly tired from the struggle of the past few years. To have to negotiate up and down two cents per box. The industry is tough, ”says Christine Lang from the sixth generation of the brewing family. “It breaks our hearts,” she says tearfully in a farewell video to the family brewery from 1617.

The large brewers are less affected by restaurant closings, but still feel significant losses. With a last beer share of 17 percent, Veltins is one of the largest gastronomic breweries in Germany alongside Bitburger. “These are sales that can no longer be made up for,” says Veltins. The Bundesliga soccer league is also bitter for the sponsor of Schalke 04. And the canceled European Championship 2020 would have meant an additional 900,000 hectoliters of business.

Beer expert Marcus Strobl from market researcher Nielsen observes that the Germans bought eleven and twelve more beers and mixed drinks during the calendar weeks than in the previous year. This applies to food retailers without discounters. But these growth rates by no means make up for the slump in catering. “Beer is an emotional product. You drink it in good company and when you feel good, ”says Veltins. At home in quarantine, less beer is drunk.

Veltins is currently preparing a uniform discharge regulation for its 14,750 catering partners. The beverage wholesaler also suffers and remains on the beer for the catering trade. Veltins now wants to help wholesalers out of liquidity needs with millions of credits. “We want to send a clearly noticeable signal that we will make it easier for beverage wholesalers to stay on course in heavy seas,” said Michael Huber, General Representative of Veltins.

The private brewery Krombacher sells about every tenth beer in the catering trade. The business has now broken down and retail sales have largely remained stable. There would soon be many marksmen’s festivals in the region, which are now also being dropped. Krombacher is also in discussions with its contract innkeepers about leases and beer purchases. Any deferral will be decided in each individual case.

Seasonal workers for hop care are missing

The German brewers will soon face further adversity with hops. After two years of drought, the harvest could collapse again and the price could rise, fears Walter König, managing director of the Society for Hop Research. Because seasonal workers from abroad are missing. Because of the corona restrictions, many are no longer allowed or do not want to enter the country. This creates major problems in the Bavarian Hallertau, where almost 1,000 hop growers grow a third of the global hop volume.

From mid-April, around 15,000 helpers will be needed to clean and wire up the hop shoots by hand. This has to be done in a short time window of around three weeks. The Federal Government decided on Thursday to allow at least 40,000 seasonal helpers to enter the agricultural sector in April and May. But that doesn’t help the hop growers much. Because asparagus, strawberry and vegetable growers currently have an urgent need for helping hands.

Despite many calls, domestic replacements are not so easy to find. “Not everyone who believes that they can now earn something in the hop garden is suitable for it and can survive it,” emphasizes König. It is not for nothing that the plant managers rely on the well-established, long-standing working teams from Eastern Europe. He fears massive hops supply shortages for the brewing industry. This could lead to market distortions with extreme cost increases.

Füchschen brewer Peter König from Düsseldorf has other concerns at the moment. In the meantime, he has increased his overdraft facilities with the Stadtsparkasse and applied for loans with the KfW. “Hopefully they will come soon, even if I have to pay them back in five years,” says König. The deferral of the beer tax also helps. However, a medium-sized company of its size in North Rhine-Westphalia – unlike in Bavaria – is not entitled to emergency aid that cannot be repaid.

But even if the breweries open again, a certain reluctance to make contact and the guests’ reluctance will remain for the time being, says König. He therefore wants to equip his waiters with fabric breathing masks with Füchschen motifs. Despite the crisis, the brewer tries to look ahead: “After all, the glass is always half full for a Rhinelander.”

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