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Global Economy

Hardly any beer without gas

"Germans are just learning how to drink beer again," says Michael Huber. The boss of the Veltins brewery speaks of an uncanny need to catch up among the Germans. The beer is brewed and bottled in large quantities in his brewery in the Sauerland region of North Rhine-Westphalia. But brewing beer requires energy. And that could become scarce if Russia were to stop natural gas deliveries.

"The beer business in gastronomy is clearly picking up. But brewing beer is more expensive than ever," says Huber. Energy is the most important ingredient in brewing, but the price of natural gas has increased by 340 percent in the past 12 months. The cost explosion hit everyone in the industry, not just Veltins. "Regional brewers in particular are still at risk. They cannot compensate for all the higher costs with higher prices," says Huber.

Breweries and suppliers rely on gas

According to the German Brewers' Association, the majority of the 1,500 breweries in Germany that bottle non-alcoholic beverages and water in addition to beer are dependent on gas. For many years, companies have been looking for solutions to reduce their energy consumption and become less dependent on gas.

"For months, the entire beverage industry has been preparing intensively for an impending gas shortage," says Holger Eichele, general manager of the German Brewers' Association. "A gas shortage would have dramatic effects – also indirectly, since not only breweries are dependent on imported gas, but also their upstream suppliers, such as the malt houses or the producers of glass, cans, cardboard and other packaging." And this at a time when people are thirsty again and more beer is being consumed for the first time since the start of the coronavirus pandemic.

Corona lockdowns devastating for the industry

Due to the corona lockdowns, restaurants, pubs, bars, cafés and hotels were closed for months, causing the draft beer market to collapse. The cancellation of thousands of events was also devastating for the breweries. "Draft beer became unsaleable practically overnight, the breweries had to pour expired beer down the drain and register short-time work," says Eichele. "A catastrophic situation for the brewing industry. The companies are still a long way from recovering from this – many still have their backs to the wall."

Will the beer end up getting more expensive? "It is not surprising that drastic cost increases have to be passed on to the final price at some point," says the managing director of the German Brewers' Association. "We think most consumers understand that."

Prepared for the gas crisis

The brewhouses, in which beer precursors are heated, are mostly operated with gas. The Veltins brewery in the Sauerland has now purchased an oil supply for five weeks so that it can switch from gas to oil in an emergency. Huber has built up new tank capacities so that the steam boiler can also be operated with heating oil for a certain period of time. He also ordered large quantities of glass ahead of time so that the bottles would not run out.

The uncertainty on the market is greater than ever. "There is fierce cutthroat competition on the shrinking beer market. Many brands have been losing volume and image for years. Veltins' output, on the other hand, has grown by 15 percent over the past ten years, and sales by almost 30 percent," says Huber. The head of the Veltins brewery hopes that his brewery and the entire industry will come through the new crisis well. The brewers were actually on the up again after bottoming out. "If there is no Russian gas, we would have a serious problem."

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