Germany key to Europe’s flagging spirits volumes

10th April, 2013 by Chris Mercer

Jack Daniels RTD

RTDs like Jack Daniel’s & Cola are big business in Germany

Heavy discounting

That said, avoiding price promotions can be tricky in Germany’s hard-discount retail environment. Despite a shift towards premium international brands, discount retail channels still represent around 44% of spirits volumes in Germany and around a third of whisk(e)y sales, claims Fay. Euromonitor analysts say this is more of a problem for vodka, where private label offers stronger competition to branded players than in whiskey.

Still, German retailers are not scared of flexing their muscle, as Campari found to its cost last year when a commercial dispute stunted Aperol’s impressive growth in Germany and dented the Italian distiller’s overall sales in Europe.

Beam’s Jus says how demographics are changing things. “Discounters’ growth driven by new outlets is slowing down, and with the trend towards smaller households living in urban areas we see that premium city supermarket concepts can generate growth even at higher prices.”

Although it isn’t all doom and gloom today in retail, he adds that “discounters such as Lidl, which has a huge assortment of strong brands, are seen by consumers as regular shops, which will not necessarily deteriorate the image of a brand if sold there.” To build that image, brand owners look to the on-trade.

Jameson is focusing most of its energy on Berlin’s trend-setting bar scene, which Simon Fay slots in alongside the likes of London’s Shoreditch, Williamsburg in New York and Portland in Oregon. In key German cities, the bar scene is also benefiting from a blossoming cocktail culture. If the Beatles were partying in Hamburg today, you might find them in Bernstein Bar sipping fresh Caipirinhas.

Trade tactics

Interest in the annual Bar Convent Berlin (BCB) expo is “exploding” amid a stream of bar openings and overseas visitors, says BCB co-founder Helmut Adam. For Adam, who also co-founded German language trade magazine Mixology, growing consumer interest in cocktails has dovetailed with a new generation of bar, hotel and restaurant owners “who have embraced the modern bar” and see value in employing skilled bartenders. This is offering opportunities for white spirits, such as rum, vodka and Tequila, in particular.

At last October’s BCB, Mexico was the chosen “guest” country and impressed everyone with its the level of engagement. “They had a big table loaded with agave spirits, including lots of mescal and lots of raicilla,” says Tomas Estes, international Tequila ambassador and the founder of the Ocho brand. “I thought, ‘this could be extremely messy’, but everyone respected it. No bottles were pinched and it was a great way to promote the categories.”

Behind Germany’s cocktail culture, a fledgling craft spirits sector is emerging in Germany, which only seems natural given that the country makes stills for most craft distillers elsewhere. There is more to this trend than a couple of bartenders pouring spirits over the breasts of supermodels (Google ‘G-Spirits’).

“The figureheads of the new boutique distillery boom are British style gins with a local twist,” says Adam. German farmers already distilling their fruit or barley “are waking up to new opportunities now as they see people like Alexander Stein (Black Forest Distillers) selling a 0.5-litre bottle of gin for €40.”

Look out for craft vodkas as the next trend, Adam adds. For foreign distillers, the rising popularity of British-style gins sets up obvious opportunities for premium, international brands. Beam’s Jus is careful to show some caution on Germany’s prospects.

“The key challenge for Germany is that available household income isn’t growing as fast as living costs,” he says. Right now, though, Germany offers a relative oasis in Europe’s economic desert.

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