Business | German beer

Pure, cheap and a bit dull

Brash Americans plan to froth up Germany’s staid brewing business

Quality, quantity but not much variety
|BERLIN

THE dirndl-clad waitress bringing huge mugs to Lederhosen-wearing revellers at Oktoberfest is an image that, like none other, shows how central beer is to German culture. The national brewers’ association declares Germany “European Champion”. It brewed 94.4m hectolitres last year, beaten only by China, America and Brazil.

But the truth is that Germans are going off their ale. At unification in 1990, annual consumption averaged 148 litres per head; last year it was just 107 litres. Instead, they are turning to wine, which has a higher status. Connoisseurs think there is another reason for falling sales: that so many German beers are bland and indistinguishable. The country has many tiny breweries whose ales can only be had locally. Some, like the smoked beers of Bamberg in Franconia, are distinctive. But many of the small fry competently but predictably turn out a narrow range of flavours.

Rory Lawton, an Irish beer expert in Berlin, thinks Germany’s Reinheitsgebot, or beer-purity law, is discouraging innovation. The 1516 law was intended to make it easier to tax beer, through levies on its permitted ingredients: malted barley, hops, water and, later, yeast. Centuries on, brewers began using the Reinheitsgebot as a marketing tool to promote their products as pure and authentic. If anything else is put into a brew made in Germany it cannot be called Bier, but must be labelled “alcoholic malt drink”.

Today, the link between quality and the purity law seems strange outside German brewing circles, since the restriction on experimenting with ingredients has meant that the country has largely missed out on the American-led “craft beer” craze. Germany’s beer exports have been flat since 2007, whereas imports of more varied foreign beers have climbed. In America, consumption of the watery swill that passes for beer is falling, but the trade body for craft brewers reckons their sales rose by 17.2% in 2013. Two of Germany’s small neighbours, Belgium and Denmark, are also turning out exciting new brews.

Heiner Müller of Paulaner, the Munich-based maker of Germany’s most popular Hefeweizen (cloudy, wheaty beer), argues that the Reinheitsgebot is needed because German consumers expect it. It need not be an obstacle to diversity: the varieties of hops, malt, yeast and other factors like temperature could produce over a billion beers, he says. But German brewers have largely stuck to a few traditional styles. For instance, it is hard to find porters and stouts, or the hoppy, high-alcohol brews now popular on America’s west coast.

Greg Koch hopes to change all this. His Stone Brewing is America’s tenth-biggest craft brewer, with sales last year of $137m. On July 19th it said it will invest $25m in a new brewery and restaurant in Berlin—the first brewery in Europe to be owned and run by an American craft brewer. Can Stone convince German palates to adapt to flavours like its Sublimely Self-Righteous Black IPA? Mr Koch says he did the same amount of market research he had done previously in America: “Zero.” He quotes Steve Jobs, Apple’s late boss, to the effect that customers do not know what they want until you show it to them.

If Stone succeeds, it may be no bad thing for the German brewers. They are under price pressure—beer is often cheaper than bottled water. (In January five big brewers were fined for trying to boost prices with a cartel.) Innovation could tempt back middle-aged, status-conscious drinkers, and get them to pay more for something new, through a link to fine dining. Many American restaurants, and ones elsewhere in Europe, have as many beers as wines on their menus. For Germans to learn lessons about beer from their neighbours and the Americans will be galling. But it might be better than hoping that the Reinheitsgebot, soon to turn 500 years old, will prop up German beer sales forever.

This article appeared in the Business section of the print edition under the headline "Pure, cheap and a bit dull"

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