Krombacher Expects German Beer Market to Shrink Again This Year

Krombacher Brauerei GmbH, maker of Germany’s best-selling lager, expects beer consumption to decline in its home market this year as an ageing population drinks less.

“The consolidation pressure in Germany is rising as we have overproduction in a shrinking market,” Uwe Riehs, Krombacher’s head of marketing, said in an interview today in Dusseldorf. Krombacher has a “well-provisioned war chest” to make acquisitions in the beer or the non-alcoholic beverages market, he said, adding that the company has no concrete takeover plans.

Krombacher said today that revenue last year was unchanged at 643 million euros ($905 million) as higher sales of the non- alcoholic beverages it distributes, such as Schweppes and Orangina, offset a decline in beer. Full-year beer output fell 1.2 percent by volume, according to Riehs.

Per-capita consumption in Germany probably dropped to about 110 liters (29 gallons) last year, Riehs said. This compares with 126 liters in 2000. The rate will continue to fall this year even though the Soccer World Championship will have a positive effect worth about 0.5 percent of sales, he said.

The market is also under pressure as discounters try to benefit from overproduction by selling beer for as little as 19 cents for half a liter to attract customers. Closely held Krombacher has no plans to enter the discount beer market and wants to start selling tea beverages this year to compensate for falling beer demand, Riehs said.

Krombacher, which is based in Kreuztal, didn’t provide any figures for profit and said it is “satisfied with earnings.”

To contact the reporter on this story: Holger Elfes in Dusseldorf at helfes@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.

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