Industry survey on beer sales: Significant losses in 2020
The renewed lockdown since the start of November 2020 has compounded losses and revenue declines related to beer sales to historic dimensions at German breweries in 2020.
A current industry survey by the German Brewers Association (only available in German) states that more and more medium-sized and craft breweries are experiencing drastic and existence-threatening drops in revenue. Holger Eichele, Chief Executive of the Deutscher Brauer-Bund (DBB), summed it up as follows:
“The situation is dramatic and without precedent in the post-war period. The larger a brewery’s catering and events business, the more devastating the losses.“
Beer sales – Up to 70 percent losses
Breweries with beer sales composing only a small portion of their catering businesses report revenue declines in the single digits or as low as zero. However, most companies reported massive beer sale reductions, in some cases amounting to 70 percent as compared to 2019. Furthermore, this has led to high losses that the companies will need to compensate for years to come.
Breweries surveyed by DBB averaged 23 percent fewer transactions with beer and mixed beer beverages last year than in 2019. The association survey states that smaller companies with up to 30 employees in particular, that often are more affected by drops in catering sales and festive events cancellations, are suffering from beer sale declines of 50 percent and higher.
Only a very small number of breweries that offer beers largely or solely to retailers could maintain their 2019 sales levels in 2020. Across all breweries surveyed, there was an average beer sales decrease of 19 percent.
Government aid for breweries mostly insufficient
Over three quarters of the breweries surveyed (79 percent) reported that government and state aid for affected breweries were insufficient. Only one in ten found the government and state support to be sufficient. Eleven percent were unable or unwilling to assess the aid. The companies surveyed frequently stressed that to avoid irreversible economic damage, un-bureaucratic, faster and more effective aid was an essential priority.
Due to the brewing industry’s intimacy with the hospitality industry, similar support is being requested for the sector as that of catering. In this context, brewpub discrimination draws particular criticism, since these mixed businesses cannot apply for the aid comparable to that provided for other catering formats. Breweries are pointing out that they would need to retract considerable draft beer quantities from the catering industry, thereby destroying it, if they do not receive appropriate compensation for it.
Many breweries are advocating for the re-instating of the old beer tax quantity scale in order to help smaller companies. Likewise, the brewing industry stands firmly behind demands for steady VAT reductions in gastronomy and the inclusion of beverages. These companies also request expansions of loss carryforwards, thereby making the Working Hours Act more flexible, continuing the short-time working regime even after lockdown ends and accelerating government vaccination programs.
Far-reaching effects feared
The industry expressed great concern when asked what medium-term effects the coronavirus crisis could have on the German brewing industry (press release only available in German).
Approximately 91 percent of the companies fear losing numerous sales outlets due to waves of bankruptcies in the hospitality industry. Moreover, concerns about higher taxes and duties resulting from the coronavirus crisis (70 percent) are closely related to fears of many significant operational closures and bankruptcies to be expected in the brewing industry (66 percent). However, 64 percent expect the strengthening of online trade and delivery services.
Overview of the DBB survey on beer sales
Between December 16 and January 13 2020, the DBB surveyed over 80 breweries of all size classes. Nearly one quarter of those companies have fewer than 30 employees, while a further quarter had up to 60. Of the breweries surveyed, 22 percent have between 60 and 100 employees, 17 percent between 100 and 300 and finally 10 percent have over 300. This survey also paints a clear picture of the current industry mood, but does not claim to be directly representative.
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