Oktobergloom

Producing too much,consuming too little: beer is a microcosm of Germany

The morning after the night before is a time for reflection. Waking this week after the 177th Oktoberfest,Müncheners were not alone in nursing a hangover. Although festival-goers downed a record 7m litres of beer this year,Braumeisters are left with a painful headache of their own: the shrinking German appetite for beer. In 1991 the average German quaffed 142 litres of the stuff,but intake has declined every year since. By 2009 German consumption per head had fallen below 110 litres,less than in the Czech Republic,Ireland and Austria. Another fall is expected this year.

An ageing,shrinking population is drinking less. But habits are also changing. Young people have acquired a taste for more exotic or non-alcoholic drinks. Richer people see wine as more upmarket than beer. To the disappointment of many,drinking beer at lunchtime is frowned upon. Even among the traditionally hard-boozing middle-aged,health concerns have curbed drinking.

This trend is not unique to Germany: beer drinking is stable or in decline in all mature markets. But it is especially striking because of beers national symbolism. This is a centuries-old industry,governed by the worlds oldest food law,the 1516 Reinheitsgebot purity law. Perversely,the taste for quality creates problems of its own. Mass-produced beers are derided as Spülwasser dishwater. The four biggest global brewers have less than a fifth of the German market,compared with nearly half the global one. Instead,local brewers dominate,creating the most fragmented big beer market in the world. Prices are kept low by fierce competition among 1,300 breweries,more than the rest of Europe combined. Unable to cut costs or squeeze retailers margins,smaller brewers are struggling.

Germany has not fallen out of love with beer. It is the worlds fifth-largest market,and by far the biggest in Europe. But for the brewers,a gentle long-term decline looks inevitable. In 20 years time consumption may fall to as little as 80 litres per head,predicts Marc-Oliver Huhnholz of the German Brewers Association. More and more breweries will have to close, he says. We are not sure where the journey will go.

The Economist Newspaper Limited 2010