Breweries still under high cost pressure

The brewing industry continues to be under massive cost pressure. Even though energy prices have stabilised and are declining at a high level and supply bottlenecks have recently become less frequent, the costs are an immense burden. According to a survey by the German Brewers' Association, the 1,500 German breweries continue to be confronted with drastically increased prices for almost all raw materials, supplies and other inputs. For example, the cost of glass bottles has gone up by up to 140 per cent since the beginning of 2022, and for brewing malt by as much as 150 per cent. In addition to price jumps for materials such as crown corks or labels, rising labour costs are also causing problems for the companies.

"The challenges for the brewing industry are immense, there is no reason to give the all-clear," says Holger Eichele, General Manager of the German Brewers' Association (DBB), looking ahead to the second half of the year. The industry is still suffering from the bitter losses during the Corona crisis, when draught beer was unsaleable for months. The exploding costs since the beginning of the pandemic have further aggravated the situation for the ailing companies. Even if the prices of individual raw materials and supplies have recently left their highs, this does not mean that the pressure on the farms is decreasing. Prices are still far above pre-crisis levels, Eichele emphasises.

From the brewing industry's point of view, it was only possible to implement urgently needed price increases in part, which is also clear from the statistics: producer prices, i.e. the prices at which breweries sell their beer in Germany to retailers or restaurants, have only increased by 7.3 per cent since April 2022, according to the Federal Statistical Office. By comparison, producer prices across all food and beverages increased by 12.9 per cent in the same period.

Against this background, the industry association reacts with incomprehension to pronouncements by individual trade groups that claim to suppliers that the costs for raw materials in food production have meanwhile fallen sharply. "Like almost all producers of food and beverages, breweries continue to face massive burdens due to persistently high and rising costs," says Eichele. "No one should be surprised that we too are calling for partnership in this difficult situation."

According to the Brewers' Association, it will be years before the industry can hope for a recovery in view of cost pressures and the economy, especially since the geopolitical risks for the economy have recently become even greater. Rising prices and interest rates as a result of inflation and the current weak consumer climate - domestic beer sales accumulated until April 2023 are 4.7 per cent below the value of the previous year - would have further exacerbated the problem for the companies.