group 6 german beer

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German Beer

By: Aayushi Srivastava

Kritika Rai

Mehak Motiwala

Siddharth Kothari

Vinay Buchasia

Table of Contents

Serial No. Page No. Title

1 2 German Beer: A Brief History

2 5 German Beer: Economic Impact And Linkage Effect

3 6 German Beer: Industry and Market Structure

4 7 German Beer: Uses

German Beer: Government Alcohol Policies

5 8 German Beer: Oktoberfest

6 9 German Beer: A Declining Beverage?

7 10 German Beer: Presence in IndiaGerman Beer: SWOT Analysis

8 11 German Beer: Conclusion


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Synopsis

Someone once very rightly said No great story ever starts with, that time I drank milk.

And with this Group 6 would like to introduce their topicGerman Beer.

The brewing industry is a global business, consisting of several dominant multinational companies

and thousands of smaller producers ranging from brewpubs to regional breweries.

The highest density of breweries in the world, (most of them microbreweries), exists in the German

Region of Franconia, which has about 200 breweries.

Beer is a major part of German culture. For many years German beer was brewed in adherence to the

Reinheistsgebotor "German Beer Purity Law" which only permitted water,hops,andmalt as

beer ingredients.

Its been observed that while German wine is becoming more popular in many parts of Germany, the

national alcoholic drink is still beer, and even though its consumption per person is declining at 106

litres annually, it is still among the highest in the world.

German Beer contributes significantly to the GDP of the country, due to the large-scale production

and consumption of beer.

Moreover Oktoberfest is Germanys premier tourist attraction, with more than six million attendees

and more than seven million litres of beer sold each year. It is a celebration of beer and an important

part of the countrys culture, and adds to the GDP remarkably.

However despite all this the German brewing industry is at a crossroads dude to various factors such

as an aging population, high fertility rate, etc.

On the bright side, fortunately for beer lovers around the world, many of these breweries export their

beer to near and far places, Cheers!
http://en.wikipedia.org/wiki/Hopshttp://en.wikipedia.org/wiki/Malthttp://en.wikipedia.org/wiki/Malthttp://en.wikipedia.org/wiki/Hops


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GERMAN BEER

Beverages, like cuisine, are symbols of the culture theyveemerged from. The greatest drinks arepearls of the human race. The Champagne or the Cognac lead us to France. The Sherry carries the

essence of Spain, and how can the Vodka be anything but Russian?

Likewise, when we partake a Munich Helles or an Oktoberfestbier, we are transported to the land of

the Germans. Germans love beer, ranking 3rdin per capita consumption (behind the Czechs and the

Austrians) at an astonishing 106 litres per year. Beer production and consumption is ingrained into the

German way of life. With 1300 breweries operating within its boundaries, Germany has the highestdensity of breweries on the planet. These 1300 breweries mill out 10.6 million kilolitres of beer

annually, the highest in Europe. It is an incredible achievement, giving that they are beaten in beer

production only by much larger countries. (China, USA, Brazil)

German Beer: A Bri ef H istory

Beer was first brewed by the Sumerians and the Babylonians, around 5000-8000 years ago. Beer was

first brewed in Europe by the Germanic and Celtic tribes of central and northern Europe, around 3000

years ago. However, in the 400 years that followed, the Germans had firmly established their spot as

the primary brewers in Europe.

Germanic tribes drinking habitswere first recorded by Roman historian Publius Cornelius Tacitus in

the year 98 A.D. In his De origine et situ germanorum (About the origin and location of the Germans),

Tacitus asserted that the Germanic people were prolific consumers of beer, who organised drinking

parties at the slightest excuse. He states that it was customary for the tribes to invite guests to their

homes for a meal and drink.

The Romans looked down upon Germanic beverages, with wine being the supreme drink. However,

even the Romans succumbed to the allure of Germanic beer. Multiple Roman tombs (dating back to

the year 200 A.D.) had epitaphs identifying the dead occupants as beer merchants. The Romans

themselves had learnt the art of brewing from the Germanic tribes of central Europe.


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By the advent of the sixth century A.D., the Western Roman Empire had crumbled to dust, and the

Germanic way of life flourished along Central Europe, in the Teutoburg forest and along the river

banks. Life for the next two and a half centuries, when not interrupted by raiding Huns or Saracens,

was generally peaceful. While the man of the house was outdoors, farming and rearing domestic

animals, the lady of the house spent her day cooking and brewing. Brewing was as ubiquitous as

cooking in German families of that period. It was customary for a family to share their brew with

neighbours.

In the year 768 A.D., King Charles I (Charlemagne) was proclaimed King of the Franks (the Franks

were an assimilation of Germanic tribes0). With Charlemagnes ascent to the throne, feudalism was

once again imposed in central Europe. Now, all land was owned by the crown, with vassals given

parcels of land to govern. As a result, the serfs could hardly find any grain of their own to brew.

Brewing was legal under Charlemagnes rule, as long as you could find the grain. Due to lack of

private ownership of land, the serfs were no longer able to procure grain, leading to a decline in the

brewing of beer.

Christianity, by the end of the first millennium A.D., had spread across Europe. With the spread of

Christianity came abbeys and monasteries. In the year 1040 A.D., the Weihenstephan Abbey (built 8th

century A.D.) received official brewing privileges and the right to sell its beer for profit. Today, the

brewery at Weihenstephan is the oldest continuously operating brewery in the world. Abbeys, and

eventually nunneries too, became centres of brewing. Friars and nuns, producing more bread and brew

than needed, often shared their food and drink with passers-by. As a result, many friars and nuns

became specialized in the brewing of beer, and monastery beer gained a reputation for high quality.

The 10thand 11thcenturies A.D. witnessed the heights of monastic brewing in Germany, with 500

monastery breweries producing beer of unsurpassed quality and quantity for a nation of 10 million

inhabitants.

By the 12thcentury A.D., however, the power and clout of the monastery breweries began to decline.

Feudal lords began to take over the breweries, and they often built their own court brew houses.

However, the transfer of expertise proved to be more arduous than the transfer of brewing rights. As a

result, the quality of beer fell, and so did consumption.


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Emperor Frederick I, alarmed by the steady fall in quality, was the author of the 1stknown beer

regulation in Germany (year 1156 A.D.). The Emperor decreed that a brewer who makesbad beer or

pours an unjust measure shall be punished; his beer shall be destroyed or distributed at no charge

among the poor. Upon violation of this law, the bewer lost his brewing license.

In the year 1516 A.D., the famous all-Bavarian beer purity law, Reinheitsgebot, was introduced by

Duke Albert IV, where the brewers in the city of Munich were forced to take an oath to use only

barley, hops and water for their beers. Furthermore, the Duke introduced price controls, with beer

costing more in summer than in the winter. Initially issued in Bavaria only, the Reinheitsgebot

eventually spread to all of Germany. It gave the government tools to regulate the ingredients,

processes and quality of beer sold to the public. The Reinheitsgebot is the oldest (still existing) food

quality law in Germany.

Until the 16thcentury A.D., German beer was mostly classified as ale, which thrived at temperatures

ranging from 15-20C. However, using the trial and error method, breweries were able to produce

beer classified as lager. The lager was considered purer and the better tasting of the two, and in the

year 1553 A.D., summer brewing was outlawed in Bavaria. Until 1553, beer in Germany was mostly

ale. However, due to the outlawing of summer brewing, lager eventually took over as the leader in the

beer market.

Over the centuries, beginning in the 18thcentury, scientific research, better infrastructure and

temperature monitoring has vastly improved the quality and quantity of beer produced. The expertise

and specialization gained over two millennia, coupled with stringent quality laws, has helped preserve

the quality of German beer. Given the high density and variety of breweries, it comes as no surprise

that Germany is a leading beer producer in the world. Its weather conditions also favour the lager,

which is widely accepted as the better tasting variant of beer.

Weihenstephan Brewery


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German Beer: Economic Impact and Li nkage Ef fect

Beer is Germanys most consumed alcoholic beverage, with the average German consuming 106 litres

of the beverage each year. Germany also has the largest number of breweries in Europe, and the

highest density of breweries in the world.

The economic impact of the brewing industry in Germany can be expressed as follows:

Germany is the leading producer and consumer of beer in Europe. (10.6 million kilolitres and

9.6 million kilolitres respectively)

The number of employees directly employed in German breweries is 33400 Full Time

Employees. (FTEs)

The brewing sector also generates important indirect effects on the supply sectors; an

estimated 49000 jobs in these sectors can be attributed to the brewing sector, with the

services sectors and agriculture benefitting the most.

In addition to these direct and indirect effects, the hospitality sector and retail also benefit

from beer sales. 429000 jobs in the hospitality sector can be attributed to beer sales, and

38000 people in retail owe their jobs to the brewing sector.

Total turnover in hospitality sector due to beer sales is estimated at 19.1 billion euros.

Total turnover in retail sector due to beer sales is estimated at 10.7 billion euros.

The government also benefits from beer sales. Excise revenues amount to 787 million euros,

total VAT revenues from German beer consumption amount to an estimated 4.1 billion

euros, and personal direct taxes paid by people whose jobs are attributable to beer amount to

an estimated 2.6 billion euros. Total tax revenues for the German government are therefore

estimated at 7.5 billion euros.

While the brewery sectors total contribution in absolute terms is huge, it consists of only 0.005% of

the governments tax revenue. The brewery sector employs 550000 Germans out of Germanys

approximately 45 million workforce. The productivity per employee in terms of value-added in the

German brewing sector is also relatively high when compared to other sectors.


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German Beer: I ndustry and Market Structure

Germany accounts for 26% of all of Europes beerproduction. Germany also has the highest export

volume of all European countries. Of a total production volume of 10.6 million kilolitres, 1.37 million

kilolitres are exported. Another 3.1 million kilolitres of foreign beer is imported, and German locals

consume 9.6 kilolitres of home grown beer. More than 75% of all German beer exports go to other

European countries.

With such a large amount of beer consumption amount of beer (9.6 million kilolitres), Germans lead

Europe in beer consumption, with UK and Spain a distant 2nd

and 3rd

respectively. 70% of the beer

consumed by Germans is classified under lager, with ale having only a 30% market share.

Around 25% of total German beer is sold by the hospitality sector, with the price of one litre of beer

around 8 euros. The remaining 75% is sold by the retail sector.

Due to an extremely high density of breweries serving the German population, competing in the

brewing sector is extremely cut-throat. Nearly 50% of the 1300 breweries are in Bavaria, therefore the

size of the breweries is relatively small.

Factors influencing the impact of the brewing sector on the German economy are:

Majority of breweries are relatively small.

Some strong international brands (e.g. Heineken), leading to sizable exports.

Strong competition for market.

Due to the highly competitive market, prices remain reasonable and the quality of German

beer is maintained.

Premium brands losing ground to lower priced brands.


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German Beer: Uses

Germans majorly use beer for drinking, but Germans put beer to a variety of other uses. These uses

are the following:

German households use beer while baking loaves of bread.

Germans use beer to cultivate soil. The yeast filled soil encourages the healthier growth of

plants.

Beer is also used to polish wooden furniture. Using a dampened cloth to wipe a piece of

wooden furniture gives a nice sheen to the wood.

Germans also use beer to remove stains from cloth. Rinsing with water afterward helps

eliminate the smell.

Beer is also using to polish jewellery.

Germans also use beer to cure stomach aches. Beer has known medicinal values, and helps in

the removal of kidney stones.

Beer is also used to play games that require beer. (e.g. beer pong) Germany also organises

local leagues for beer pong.

German Beer: Government Al cohol Poli cies

Germany has some of the least restrictive laws regarding the use and sale of alcohol. The foremost

function of these laws is youth protection.

Minors (14-16): Minors are allowed to consume non-distilled alcoholic beverages, such as

beer and wine, as long as they are in the company of a custodian.

Minors (16-18): Minors are allowed to consume non-distilled alcoholic beverages, such as

beer and wine without being in the company of a guardian.

Adults (18+): Adults can consume any kind of alcoholic beverage.

Vendors found selling distilled liquor to minors are prosecuted.

Closing hours for bars and discotheques are determined by the Municipal Corporation.

Germany does not require licenses for the production or sale of alcoholic beverages.

However, all vendors must follow the regulation of the Youth Protection Act.


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German Beer: Oktoberfest

Oktoberfest (locally called Wiesn), one of the largest funfairs in the world, is held annually in Munich,

Bavaria, Germany. It is a 17-18 day festival, commencing in late September and ending on the first

weekend of October. More than 6 million people attend the fest each year. The Oktoberfest has

inspired numerous spin-offs around the world. Almost 7 million litres of Oktoberfestbier is served

during the festival.

Only 6 breweries are permitted to sell beer at the Oktoberfest, and all of the need to adhere to the

Reinheitsgebot while producing the beer. The festival was first organised by the citizens of Munich to

celebrate the wedding of Crown-Prince Ludwig (later King Ludwig I) to Therese of Saxe-

Hildburghausen.

After the First World War, organising the Oktoberfest became increasingly difficult due to persistent

inflation. Since 1950, the Oktoberfest has been held each year. By 1960, the Oktoberfest had turned

into a major worldwide attraction, bringing in tourists from all over the globe. In 1980, a bomb blast

rocked the Oktoberfest, killing 13 and injuring over 200 people.

Major attractions at the Oktoberfest include amusement rides, gaming stalls, delicacies such as roast

chicken, roast pork, grilled ham hock, grilled fish, sausages, pretzel, dumplings, cheese noodles,

potato pancakes and local Bavarian delicacies such as Obatzda and Weisswurst.

The music level is limited to 85 decibels during afternoons, to ensure that the fest does not exude an

over the top party aura. Smoking in tents (put up for the fest) is prohibited, and the sale of tobacco is

abandoned by common consensus. In 2010, the Oktoberfest celebrated its 200thbirthday. Special

horse races (banned since 1960) were held on the occasion, and specially brewed beer was sold during

the fest.

The Oktoberfest remains one of the largest festivals of its kind, with total revenues exceeding a billion

euros, and more than 6 million people visiting the city during the fest.


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German Beer: A Decli ning Beverage?

Foreigners visiting Germany in the 19thcentury often claimed that the Germans consumption of beer

equalled their consumption of water. Beer was their national drink.The volume of beer consumed

by the Germans was awe inspiring. Fast forward a century and a half. Beer consumption in Germany

has been on the slide since the past three decades, sliding from a per capita annual consumption 145

litres (West Germany) in the late 1970s to a relatively lower 106 litres in 2013.

Germans today are consuming lesser and lesser beer than their fathers did three decades earlier.

However, even at a 106 litres per person, the beer consumed isnt a miniscule amount. If you visit

Germany, even today, youd lose count of the number of people youd see laden with beer steins.

Beer consumption all across the Western world is declining, with North America and Europe

reporting a steady decline in beer consumption. Beer producers all over Europe are compensating for

this loss by turning towards Asia, where beer consumption is steadily on the rise.

In Germany, the brewery sector is highly fragmented. With no brewery that could compete on the

international market against much larger competitors, German brewers will find it tougher to cushion

the blow on declining beer consumption. More and more youngsters are switching over to wine, and

drinking beer during the day is frowned upon. German brewers are attempting to spread awareness

about their drinking culture, in an attempt to attract foreign customers.

The German beer market is shrinking, and the many breweries will undoubtedly perish in the future.

However, if Germany is to maintain its status as the beer nation, its breweries must go global.


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German Beer: Presence in I ndia

A majority of the beer market in India is occupied by breweries like United Breweries (Kingfisher),

Carlsberg, SABMiller and Mohan Meakin. With an annual per capita consumption of 1.6 litres, India

isnt a majorbeer consuming nation, and had escaped the radar of German Breweries. However, in

recent times, German breweries such as Heineken and Kaltenberg have entered the Indian market.

With beer consumption in India on the rise, a higher number of German breweries intend to enter the

market.

German Beer: SWOT Analysis

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

Presence of a strongtradition and culture ofenjoying beer in thecountry.

Cash asset problemsfor family breweries.

Increasing demand inAsia.

A slump in per capitaconsumption for thelast 35 years.

High quality due to thecut-throat competitionin the market.

Some of the companiesuse their real - estateholdings to financebrewery production

costs.

Ongoing technologicalinnovations in productsand processes.

Young Germansturning to spirits andnon - alcoholic fruitdrinks, beer sales fell

2 percent in a year.

Innovative brewingprocedures despitelong history.

Entrance of globalcompetitors in Germanbeer industry has left

domestic producersshort in cash.

Better facilities forcommunication andinformation transfers.

Traditional familybreweries underpressure due to rising

costs of production.

Diversification interms of brands andproduction.

Small operationsprevent breweries fromcompeting on globalmarket.

Better mobility andongoing innovation intransportation systems.


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German Beer: Conclusion

Germany is the mecca of modern beer production, and its drinking culture is legendary. Beer drinking

is ingrained into the very culture of Germany. With its unique production techniques and purity law,

German beer has a history second only to tea (among beverages). The fragmented German beer

market is one of the most competitive markets on the planet. With the beer being highly popular, its

contribution to the German economy is significant. German alcohol laws are some of the least

restrictive, enabling the beer industry to thrive. The Oktoberfest, one of the largest attraction of its

kind, makes a significant contribution to the local economy, with over 6 million visitors each year.

However, due to a steady decline in the consumption of beer in recent times, many of the smaller

breweries will be affected, and quite a few will have to shut down. Hopefully, as German beer has

endured for the past 2000 years, so it shall endure for the next 2000 years and more.


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