Coronavirus: Oktoberfest cancellation a blow for Germany’s beer brewers

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·3 min read
07 October 2018, Bavaria, Munich: Servants dance on the tables in the Hofbräuzelt at the Oktoberfest on the last day of the Wiesn at the Kehraus. The biggest folk festival in the world lasted from 22.09. to 07.10.2018. Photo: Felix Hörhager/dpa (Photo by Felix Hörhager/picture alliance via Getty Images)
Staff dance on the tables in the Hofbräuzelt at the Oktoberfest on the last day of the festival in Munich on 7 October 2018. Photo: Felix Hörhager/Picture Alliance via Getty

Germany’s beer brewers were already reeling from the economic downturn in spring this year when coronavirus lockdowns shuttered bars and restaurants. They were dealt a second blow after the cancellation of Oktoberfest, the world’s biggest beer festival, which would have been kicking off this weekend.

Oktoberfest which runs from mid-September until early October in Munich every year, attracts more than 6 million visitors, who spend about €440m (£405m, $522m) and drink 7 million litres of beer at the 16-day beer festival.

Indirectly, including hotels, taxis, restaurants and so on, Oktoberfest generated more than €1.2bn for the local economy last year.

Watch: Germany's annual Oktoberfest cancelled for the first time since WWII

“A complete sales channel for us brewers just broke down overnight,” Andreas Steinfatt, director of gastronomy and marketing at the Paulaner Brewery Group told reporters this week. Oktoberfest is “a brand stage for Munich beers,” Steinfatt said.

“What the long-term effects will be for our industry is a bit like looking in a crystal ball at the moment,” Steinfatt added.

“The German beer market is down about 6.2% overall as of July, compared to last year,” Jörg Lehmann, chief executive of the Paulaner Brewer Group and president of the German Brewers Bund told reporters in Berlin. The 6.2% drop in sales relates to the first six months of this year.

Aerial view of the Oktoberfest grounds in central Munich. Credit: Achim Schmidt/ Paulaner Brauerei Gruppe
Aerial view of the Oktoberfest grounds in central Munich, Germany. Photo: Achim Schmidt/Paulaner Brauerei Gruppe

Even though private consumption rose during the pandemic, Lehmann said that it wasn’t enough to offset the effects of the shutdowns in the gastronomy sector. Pure beer sales via gastronomy plunged by up to 50% depending on the month, he said.

Restaurants and bars have reopened since lockdowns started easing at the end of May, but even though owners are taking strict hygiene precautions, some consumers are still uncertain about returning to shared public spaces.

Lehmann declined to give an exact prognosis for how the beer market will fare for the remainder of the year — big events are still cancelled in Germany and recent spikes in COVID-19 infections could necessitate smaller lockdowns — but said that the beer market could end 2020 with sales down between 4.5% to 5% overall.

Watch: What is a V-shaped economic recovery?

Paulaner bosses declined to give absolute numbers for the financial loss to the brewing group from the shutdown of Oktoberfest.

Germany’s decision to ban big events to avoid spreading coronavirus was a massive hit not just for beer brewers like Paulaner, but also for the 13,000 jobs that Oktoberfest creates — 8,000 permanent roles and 5,000 seasonal workers in the various tents and stands on the huge meadows in central Munich.

The 2020 closure was the first time the event, which started in 1810, as a celebration of the wedding of King Ludwig I was called off in 70 years. It had been cancelled due to epidemics before though: in 1854 and 1873 over cholera.

Asia and Russia rebounding

Paulaner, founded as a brewery in a monastery in 1634, has around 900 staff, owns around 10 different beer brands, exporting to over 70 countries. The Paulaner Group in turn is owned by Schörghuber und Heineken, with 70% and 30% share respectively.

About one-third of all the group’s beer production is exported, and they have observed a domino effect as COVID-19 spread across the world from Asia, initially shutting down China.

However, they are seeing markets coming back to life in China, Singapore, and Russia, even as Germany, Italy, France, and Spain remain in the doldrums. The Americas are even further behind in terms of returning to normality.