Retail sales providing support Virus outbreak threatens tradition-laden breweries

WERNECK, Germany, April 22, (AP): The Werneck Brewery has survived a lot: world wars, economic crises and decades of declining beer consumption. But after 400 years in existence it has finally met a challenge it can’t overcome: the coronavirus outbreak.

The brewery, which traces its history to 1617 and has been owned by the same family since 1861, is closing for good, taking with it 15 full-time jobs and more part-time positions. Also gone is a chunk of local history and tradition in Werneck, a town of 10,000 people in the brewery-rich southern state of Bavaria.

German brewers fear its demise is the leading edge of more closures as the virus outbreak threatens the existence of the country’s many local producers of the national beverage – community institutions, often family owned for generations, whose buildings and affiliated taverns are regional landmarks in a country where the hometown brew is often a sentimental favorite despite competition from national brands.

Hardest hit are smaller breweries that like the one in Werneck that depend on supplying kegs to local taverns and events such as local festivals. Restaurants are closed and the government says mass gatherings will not resume until Sept. 1 at the earliest – and even then it may take years before they rebound to levels seen before the virus outbreak.

Support

Retail sales are providing some support as people drink at home. Breweries are trying things like drivethrough sales and even shipping beer and glasses to customers so they can join an on-line tasting.

But for many the months without income may be more than they can handle.

Family member and brewery manager Christine Lang said the decision to close came with “many tears.” The beer market was already hard fought with tough price competition, she said. Then came the virus, and the restaurant customers the brewery depended on were suddenly closed, with no clarity on when they might open. “No one knows how long the coronavirus will last, when there will be an improvement, and whether the restaurants will open again at all,” she said. “And in our business it’s the case that a beer that isn’t drunk today won’t be consumed twice in a couple of months, the sales revenue is gone, lost.”

According to a survey by the national brewers association some 87% of breweries say they are putting workers on short hours, taking advantage of a government program that pays up to 60% of net salaries during business interruptions. The program is aimed at getting companies through a crisis, keeping workers from being laid off, and supporting consumer spending in the economy. But other programs such as credits and delays in collecting taxes are less useful, brewers say. Credits mean taking on new debt for the future, and the taxes will eventually have to be paid as well.

Holger Eichele, secretary general of the German Brewers Association, said that “many breweries will not survive this crisis, that is already becoming clear.” In addition to longtime brewers focused on restaurants, “we also have many entrepreneurs, that is, craft breweries, that are not yet profitable, that have borrowed money to finance their startup, and it’s also very difficult for them.”

Unexpected

The unexpected shock comes at a time when enthusiasm for craft beer and microbreweries has helped the industry overcome several decades of declining beer consumption. The number of brewers has grown in recent years to over 1,500, as startups introduced new products such as India pale ales into what had been a very conservative lineup based on traditional pilsners and wheat beers.

More diversified producers are better equipped to survive. Welde, a family run brewery near Heidelberg that traces its history to 1752, normally sells about a third to retail outlets, a third to wholesalers who supply events and sports clubs, and a third to restaurants.

Managing director Max Spielmann, who represents the ninth generation of Spielmanns to run Welde, estimates that 30-40% of sales will be lost in April, May and June. “If you have 85% of your sales in keg beer to restaurants, then you only have 15% of your revenue left,” he said. “The only sales channel that is doing well is retail sales in grocery stores, one can see that the consumption that normally would have taken place in restaurants has shifted to home.”

He and other brewers are trying new things out of necessity. Welde offers an on-line beer tasting on Facebook. Participants can have six different beers and the appropriate glass delivered for 25 euros ($27) so they can taste along with the chat on April 23.