German Breweries Are Going Flat

FOR GERMANY'S BREWERS, this isn't a time for merrymaking. Traditionally, Germans flock to a Biergarten in the summer to hoist liter-size mugs and belt out drinking songs. Yet although Germans still savor more suds than anyone else but the Czechs, they are tipping back less than they used to, often reaching for mineral water instead. With nearly 30% overcapacity and half of the country's 1,278 breweries in the red, analysts see a major shakeout looming. Only 600 to 700 will survive by decade's end, predicts Michael Dietzsch, president gf the German Brewers Assn.

So brewers are forced to adopt new strategies, such as producing low-calorie and nonalcoholic beers. In a country where no label has more than a 5% market share, some are pushing beyond regional niches. For instance, Bitburger, whose tangy pilsner is made in the Eifel area south of Bonn, is bidding for a wider following by sponsoring Formula One racing.

Others are hoping the German reputation for good beer will carry them into international markets. Now, only 7% of German beer is exported, with Beck's and Holsten accounting for 40% of the total. Although giants on the order of Heineken and Anheuser-Busch are entrenched in key locales around the world, German brewers are eyeing growing markets for suds in eastern Europe and Asia.

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