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Marketing, future scenario planning Karlsberg brewery

Examensarbeit 2003 46 Seiten

BWL - Offline-Marketing und Online-Marketing



1. Beer Industry Analysis
1.1 Overview German Market
1.2 PEEST Analysis of the German Beer Industry

2. Competitive Analysis

3. Future Scenarios
3.1 Scenario One
3.1.1 Strategy Plan Scenario One
3.2 Scenario Two
3.2.1 Strategy Plan Scenario Two


1. Beer Industry Analysis

1.2 Overview German Market

Germany is the largest beer-producing nation in Europe, and has not yet experienced concentration of its brewing industry on the same scale as the rest of Europe. The market is dominated by domestic breweries, many of which are regional[1]. In 1999, 5000 different brands of beer where brewed, accounting for half the world’s total (please see Appendix 1 for market share of the most popular types of beer). There are 1291 breweries which together had produced around 110m hectolitres (1 hectolitre (hl) equals 100 litre) beer at the end of 2002[2]. Most of those breweries (60%) are small, regional companies with a production of less than 5.000 hectolitres per annum[3] (please see Appendix 2 for, among others, a comparison of the concentration of the German beer industry with the rest of Europe). Interestingly, while 140 medium-sized breweries (with a volume of between 5.000 and 500.000 hl/annum) have disappeared between 1995 and 2001, the number of small breweries (including brewpubs) has increased in the same time from 643 to 782 (please see Appendix 3). The 50 biggest breweries share 60% of the market among themselves (for market share please see Appendix 4). Another significant feature of the German brewing industry is its low profitability, with a margin of 1% compared to the UK with 10% (please see Appendix 5 for an index of the rise in living costs compared to the development of the price for beer).


German drinkers are rather conservative in their choice of beer, which means they are loyal to their brand which is usually brewed locally and which they view as a product of extremely high quality. The result is that 90% of breweries sell their products within a 30-mile radius. This is one of the reasons why the market is ‘notoriously difficult for foreign companies to penetrate’[4]. Another reason is the ‘Reinheitsgebot’, the German purity law, which prohibits artificial additives to improve quality or extend shelf life, which was lifted only in 1995. Before imports had to be clearly labelled and the transportation of local products over any significant distance was clearly inhibited. Also, the creation of beer mixtures and different flavours, which currently account for a rejuvenation of the market, was greatly restricted.

Nevertheless, the German beer market is increasingly becoming the focus of foreign investors. As previously anticipated by experts, the commitment of globally operating drinks groups in Germany therefore increased during the past years (please see Appendix 6 for the world’s biggest brewers). For example, the Belgian Interbrew, after acquiring Beck’s and Diebels in 2001, made further inroads into the German market by adding the Hanover brewery Gilde which owns the East German brand Hasseröder, to its portfolio[5]. This means that Interbrew is now at the top of the biggest brewers in Germany with 11m hectolitres[6]. The Dutch Heineken group on the other side entered into a joint-venture with the Bavarian Schörghuber group (Paulaner, Kulmbacher, Hacker Pschorr) to form the Brau Holding International AG, which recently acquired a 45% stake in the Karlsberg group. Participations by international producers do not necessarily have to be seen as a threat for the domestic brewing industry but instead can create positive opportunities for German brewing groups: national brands can be placed internationally more quickly and the demand for distribution and service offerings results in better capacity utilisation domestically. Therefore, decisive companies do not have to view internationalisation as a threat, but instead can see globalisation as an opportunity for growth.

Further participations by international brewery groups are very likely in the future. Experts predict that the market will be divided between six or seven companies[7] and Rudolf Boehlke of consultancy Ernst & Young estimates that 390 of the 580 biggest breweries will have disappeared by 2015[8]. Three of the biggest German lager brands, Warsteiner, Krombacher and Bitburger, have formed a coalition to share costs and ensure distribution of their premium beers thereby trying to prevent a takeover by a foreign brewer[9].

However, the turnaround on the German beer market has still failed to materialise. Whereas innovative products made ground good, traditional beer business came under further pressure, resulting in falling sales figures overall in 2002. Above all, conventional types of beer attracted consumers less than before; business with bottled and draught beer consequently declined further in volume. Per capita consumption in 2001 fell by 1.9 percent to 123.1 litres. Accordingly, every German drank an average of 2.4 litres of beer less than the year before. In 2002, according to government figures, beer consumption fell again by 0,7%[10]. Since beer exports and imports were also around the levels of the previous year, total output of German breweries declined. In the past ten years per capita consumption in Germany fell from 142 litres to123 litres and in the long term expert estimates see 100 litres per capita as very likely[11].

Traditional beer business in the draught and bottled beer segment has been noticeably hit. Only producers who were quick to adopt a policy of innovative products and mixtures so as to adapt to changing consumption habits and consumer needs were able to profit from the positive development in the beer mix drinks segment. There was also growth among cans and disposable bottles. However, this increase was achieved at the expense of the returnable system and is based on rising consumer demand for own label and discount products. In 2002, many premium brands were loosing out whereas own-label and discounter beer increased 25 % in volume compared to 2001[12]. The decline in consumption and trend towards disposable products in the low price segment is intensifying competitive pressure among German brewers. The emerging crisis in catering – caused by restraint on the part of many consumers – means that German breweries are facing major challenges. The German Federal Statistical office estimated that the turnover in the catering sector in 2002 was 7% below the results of 2001[13].

A way out of this seems to lie in the creation of specialities and innovative trendy drinks. The sale of premixed drinks with beer increased in 2002 by 29.1% to 2.9m hectolitres[14] and has now a 3,8% share of the beer sales in the retail and off-trade sector (compared to 2,9% in 2001) and a 7,5% share of the sales made in petrol stations[15] - an important place for young people to do their shopping partly because of their convenient opening hours. Over 90% of all the beer mix drinks sold are based on the ‘traditional’ mixtures of beer and cola or beer and lemonade[16]. Also available are peach and cherry flavoured beer, beer with exotic fruits or herbs like dragon fruit and ginseng or tequila flavoured beer (now Germany’s favourite international, imported beer) (please see Appendix 7 for market share of beer mix drinks). Also, alco-pops, like Smirnoff Ice and Bacardi Rigo, are booming in Germany similar to the UK with a gowth rate of 60% (volume) between 1997 and 2001, whereas normal traditional spirits lost 8% in the same period[17]. The impact of flavoured alcoholic beverages (FAB) may be long-term, as the habit of drinking beer fails to be ingrained into novice drinkers and is thus not carried through as consumers age.

The important advantages of premixed drinks to drinks mixed just before they are sold is the steady same quality and taste of the drink as well as the convenience character, which is especially important in well frequented bars and clubs and is therefore praised by club owners as well as goers. Furthermore, consumers prefer the mix beers to traditional beer because of their low-alcohol content, which gains in relevance when the EU realises stricter driving legislations, their refreshing taste and their low-calorie character[18]. Also, packaging, like the very popular longneck bottle (see picture 1) as well as branding and marketing play an important role in the sale of the beer mix drinks.

illustration not visible in this excerpt

Picture 1

Overall, for the German market an economic upturn cannot be expected in 2003. Consumer confidence in politics and the economy has been strained enormously by stock market trends, a growing number of insolvencies, continued high unemployment (please see Appendix 8 for latest unemployment figures) and the public debate on problems of social welfare provision. No positive boosts to the willingness to consume can be anticipated as a result. Price-stable premium brands will therefore continue to have their difficulties in a mature and static market[19].

1.3 PEEST Analysis of the German Beer Industry

The following factors have an influence on the current climate in the beer industry and will possibly have effects on the industry’s future, too.

Politico-legal factors

- The beer sector is pinned against the backdrop of war in Iraq, at least in the short term. Historically, however, war has not significantly altered sales patterns of beer, and in the case of the Gulf War 1991, even prompted a slight upturn in on-trade beer sales[20]
- The alcohol limit allowed when driving has contributed to a declining beer market[21] and is likely to come under further restrictions by EU legislation.
- January 2003 saw the introduction of a ‘pawn’ on cans, which increased their share of beer sales in the past years. This is leading to buying stops by supermarkets and the taking-off the shelves[22] as a national collection system has not yet been introduced. In turn estimated profit losses of between 50 and 70 percent in the respective segment are likely[23].
- Taxation of beer by the government make it a semi-luxury product.
- A toll for the use of German motorways could be introduced as early as next year, which would raise transport costs significantly[24].
- Attempts to expand through mergers will be scrutinised ever more carefully by governments as the industry consolidates.

Economic factors

- An unfavourable economic situation means consumers prefer cheaper drinks such as mineral water to beer (please see Appendix 9 for information on the current economic climate in Germany).

Environmental factors

- Hot summers and heat waves can boost beer consumption significantly[25].
- Global warming is likely to lead to an increase in flooded fields, which results in fields having to be re-drilled which costs farmers money and time and pushes up the price of raw materials for the beer production.

Socio-cultural factors

- Health consciousness has let to a decrease in consumption and will continue to play an important role.
- The number of traditional beer drinkers, especially in the age between 30 and 50 is diminishing further. Instead consumers tend to drink more wine, selected spirits and FABs[26]. (please see Appendix 10 for trends in the German beverage market) .
- Pressure groups point to problems associated with the use and abuse of alcohol.
- The feminisation of markets, caused by most new jobs going to women and most jobs lost by men provides women with a much greater disposable income. Management guru Patrick Dixon therefore predicts a ‘huge female market growth’[27].
- An ageing population is a problem for the industry as older people tend to drink less alcohol. According to estimates in 2030 every one in three Germans will be older than 60[28]. This development has already a significant impact on per capita consumption and will become even more pronounced in the future.
- Consumers in Germany are not very brand conscious and brand loyalty is on a steady decrease as research indicates[29]. Brand loyalty to beer reaches only 44% (average: 69.3%, highest score for brand loyalty: machine dishwasher with 89.3%)[30].
- Also the important young market does not see brands as very important when it comes to beer. Youngcom! – a youth marketing consultancy – found in a brand evaluation survey that beer only reaches place eight after, among others, mobile phones, personal stereos and drinks in general[31].
- Football tournaments and other major sports events can boost market growth significantly[32].


[1] Euromonitor, (2001) ‚Market Research Europe: European Markets Beer’, May 2001, p.14.

[2] Praecklein, M. (2002) ‚ Trotz Brauereikonzentration: Die Biervielfalt in Deutschland bleibt’, from Deutsche Presse-Agentur(DPA) – Europadienst, November 25, 2002.

[3] Rintelmann, F. (2002) ‚Der Bierdurst der Deutschen geht zurück’, in General-Anzeiger , December 18, 2002.

[4] Euromonitor, (2001) ‚Market Research Europe: European Markets Beer’, May 2001, p.14.

[5] Frankfurter Allgemeine Zeitung (2002) ‚Die grossen Biermarken lassen Platz für lokale Anbieter’, December 11, 2002; p.17.

[6] Vossen, M. (2002) ‚ Braukonzerne halten Bierbranche weiter in Atem’, in Lebensmittel Zeitung, December 27, 2002; p.8.

[7] Praecklein, M. (2002) ‚ Trotz Brauereikonzentration: Die Biervielfalt in Deutschland bleibt’, from Deutsche Presse-Agentur(DPA) – Europadienst, November 25, 2002.

[8] Finke, B. (2002) ‚Lizenz zum Panschen’, in Der Spiegel, September 16, 2002; No.38, p.101.

[9] Peitsmeier, H. (2003) ‚ Zwischen Tradition und Moderne’, in Frankfurter Allgemeine Zeitung, January 16, 2003; p.16.

[10] ‚Wachstumsimpulse dank Biermix VELTINS "V+" / Konsumzurückhaltung kann Premium-Positionierung von VELTINS nicht erschüttern’, OTS Originaltextservice, February 26, 2003 [online]. Available:
[visited 12/03/03].

[11] Finke, B. (2002) ‚Lizenz zum Panschen’, in Der Spiegel, September 16, 2002; No.38, p.101.

[12] OTS Originaltextservice, February 26, 2003 [online].

[13] OTS Originaltextservice, February 26, 2003 [online].

[14] Associated Press Worldstream – German, (2003) ‘Bayerisches Bier läuft wieder besser’, January 29, 2003 [online]. Available: [visited 12/03/03].

[15] Latz-Weber, H. (2002) ‚Mixgetränke – die Retter im Biermarkt, in Lebensmittel Zeitung, November 1, 2002; p.42.

[16] Finke, B. (2002) ‚Lizenz zum Panschen’, in Der Spiegel, September 16, 2002; No.38, p.101.

[17] Pfannschmidt-Wahl, J. (2003) ‘Spirituosen: Aufgemischt’, in Food Service, February 10, 2003; p.43.

[18] Latz-Weber, H. (2002) ‚Mixgetränke – die Retter im Biermarkt, in Lebensmittel Zeitung, November 1, 2002; p.42.

[19] OTS Originaltextservice, February 26, 2003 [online].

[20] Euromonitor, (2002) ‘Market Research International: Market Report Beer’, May 2002, p.49.

[21] Euromonitor, (2001) ‚Market Research Europe: European Markets Beer’, May 2001, p.7.

[22] Vossen, M. (2003) ‘Im Biergeschäft wächst das Risiko’, in Lebensmittel Zeitung, January 10, 2003; p.14.

[23] Bauer, K. (2003) ‘Eines der besten Jahre für Veltins’, in Wirtschaft, February 27, 2003; p.15.

[24] Vossen, M. (2003) ‚Krombacher will Spitzenposition ausbauen; Mixgetraenk "Cab" wird zum Zugpferd’, in Lebensmittel Zeitung, January 24, 2003; p.18.

[25] Key Note, (2001) ‘Breweries & the Beer Market: Market Insight’.

[26] Heimig, D. (2001) ‘Das Markenbewusstsein der Jungen lässt nach’, in Lebensmittel Zeitung, November 16, 2001, p.47.

[27] Dixon, P. (2003) Future Trends... FUTUREWISE: Global Trends and Simple Messages, [online]. Available:

[visited 02/03/03].

[28] Weber, R. (2002) Accounts Press Conference of the Karlsberg Group, September 25, 2002 in Homburg

[29] Research & Media Marketing Bauer Media KG (2001)

‚Trendanalyse VA 2001: Loyalitäten – Entwicklung der Markentreue’ [online]. Available:

[visited 03/04/03], p.3.

[30] Research & Media Marketing Bauer Media KG (2001)

‚Trendanalyse VA 2001: Loyalitäten – Entwicklung der Markentreue’ [online]. Available:

[visited 03/04/03], p.3.

[31] Heimig, D. (2001) ‘Das Markenbewusstsein der Jungen lässt nach’, in Lebensmittel Zeitung, November 16, 2001, p.47.

[32] Key Note, (2001) ‘Breweries & the Beer Market: Market Insight’.


ISBN (eBook)
ISBN (Buch)
2.2 MB
Institution / Hochschule
University of Leeds – Trinity and All Saints College
Marketing Karlsberg Adnaced Marketing



Titel: Marketing, future scenario planning Karlsberg brewery