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Oktoberfest: Fizzy Opportunities in a German Beer Market Going Flat

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Germans love their beer. In 2014, they continued to have the highest per capita beer consumption globally among large economies. With a per capita consumption of 114 litres, they consumed more than four times the global average amount of beer per person. Compared to the German per capita consumption, beer consumption in the US and the UK was considerably lower at 77 litres and 74 litres per capita, respectively.

An event that draws special attention to German beer consumption is Oktoberfest: This is an annual event taking place in Munich, Bavaria, which usually attracts more than six million visitors over the course of 16 days. According to the organisers, 6.3 million revellers consumed 6.5 million litres of beer in 2014. By closely sticking to Bavarian traditions, for example, encouraging visitors to wear traditional Bavarian clothes, Oktoberfest has successfully managed to build a global brand with very good brand recognition. Traditional Bavarian clothes (Dirndl and Lederhosen) as well as steins (1-litre beer glasses) and beer tents are all important elements which are often associated with Oktoberfest, both abroad and in Germany’s other regions. Versions of Munich’s Oktoberfest are staged across the world; from the relatively close neighbour of London, to far-away locations such as China and Brazil. They all aim to recreate the Bavarian beer tent-spirit which Oktoberfest has become famous for.

Despite the popularity of Oktoberfest, beer volume sales in Germany have fallen in recent years and are expected to continue falling over the next few years. 2014 was an exception in that it registered positive volume growth of 1%, benefitting from the FIFA World Cup. However, by 2019 per capita consumption will have gone down to 106 litres. One factor weighing down beer sales is increasing health awareness among consumers, primarily in the context of a rapidly aging population. Consequently, it is not surprising that non/low alcohol beer has shown the strongest growth both in volume and value in recent years. Non/low alcohol beer was worth €1,056 million in Germany in 2014. Manufacturers will most likely invest in this high growth area, with interesting new product launches expected over the coming years.

Moreover, many young people are moving away from mainstream beer and towards other – in their opinion more fashionable or sophisticated – beverages. Craft beer could hold an answer to this; albeit coming from a very small base, it has become a visible trend in Germany recently. With a shift towards more premiumisation and consumers placing more importance on indulgence, local and craft beers produced in microbreweries will be an interesting area to watch over the next few years. Oktoberfest is already very much in line with this trend for local products: According to long-standing traditions, only beer brewed locally in Munich can be served to revellers.

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