As lucrative biofuel crops crowd out barley acreage in Germany, brewers say the drive for alternative energy sources will force them to raise the price of beer next year. Alexander Bakst reports.
Times are tough for the German beer industry.
For decades, average beer consumption in Germany has been in decline. At the same time, the cost of the raw ingredients rose sharply this year as domestic supplies of barley and wheat dried up – or drowned out in the case of this year's harvest, which was marked by heavy rainfall.
There are several factors contributing to the current shortage of malting grains, but German brewers are placing much of the blame on biofuel crops. These government-subsidized acres are increasingly crowding out conventional grains such as barley, a key ingredient for making malt and, ultimately, Germany's world-famous beer.
"With more and more farmers switching to energy crops such as corn and canola, the price hike is inescapable," says Bernhardt Gloessner, Managing Director of the Association of Private Brewers in Bavaria.
In a market where profit margins are paper-thin, Gloessner argues that brewers have little choice but to raise their prices: "The market is shrinking, and the big national brands already sell 58 percent of their beer at discounted rates to compete with low-cost brands."
Last edited by Sidewinder; 12-03-2010 at 06:14 PM.
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