Millennials lead Germany’s craft spirits boom

Millennial consumers can be a fickle bunch to please, but will their burgeoning infatuation with premium spirits spell the end of Germany’s love affair with bier? Caroline Sargent investigates.

Berlin millennials are looking to international and craft spirits and speciality cocktails

**This feature was first published in the March 2016 edition of The Spirits Business

It’s almost a genetic predisposition that Germans love beer. Biergartens have been the go-to venue for 200 years, when breweries would lure hot, thirsty passers-by to their shady tree-lined courtyards and the cool, dark cellars beneath. Euromonitor market research from 2014 ranks the average German beer drinker top of the leader board, sinking four times the global average at an impressive 114 litres per year.

However, a combination of factors including the collapse of Germany’s birth rate to the lowest level worldwide, a rapidly ageing population and a more health-conscious outlook all indicate that beer is on a downwards trajectory, with per capita consumption set to drop to 106 litres by 2019, reckons Euromonitor.

Unlikely as it sounds, young descendants of the industrial lager pioneers are shunning the two-pint stein and noisy bierkeller in favour of more measured quantities of international and craft spirits and speciality cocktails, to be savoured in hushed corners of the smartest design-led bars.

Germany has a long heritage of domestically produced spirits, with the likes of digestifs Jägermeister, Korn, Obstbrand and Underberg. With enthusiasm for imported big brands skyrocketing post-WWII, the spirits market here bridges 
all age groups. But it is the millennial generation (commonly bracketed as those aged 18-35 years), supported by middle-aged professionals, who are propping up the cocktail bars of Berlin, Munich and Frankfurt, and keeping off-trade volume sales buoyant through serving mixed spirits to friends at home.

Whisky surge

Thanks to a long-held admiration for British and American culture, whisky is the fastest growing spirit category in Germany. Pernod Ricard Deutschland leads the pack at 6% market share with brands like Ballantine’s, The Glenlivet and Jameson, which is currently enjoying its own renaissance thanks to a surge of interest
in Irish whiskey.

The popularity of Irish bars across Germany has helped brands such as Jameson and Bushmills achieve very 
fast volume and value growth, yet limited availability in the off-trade has saddled it with a slightly higher unit price in stores, compared to blended Scotch and Bourbon, reports Euromonitor.

Telser Distillery, based in Liechtenstein, produces small batch fruit, herb and root spirits and, since 2006, its own Whisky Telsington. Made using whole barley and alpine spring water, and copper pot distilled over wood fires before three years of maturation in local wine casks, each expression commands a premium price position starting at around €78 per 500ml.

Core markets are the discerning Swiss, but the company has found great success among more price-conscious Germans whose market size is ten times that of their neighbour.

“We make special products for special people, but this does not automatically mean that we deal with the older generation only. A surprisingly big number are new, young consumers,” says general manager, Marcel Telser.

“The younger generation is not set in a ‘flavour-mind’ as probably my generation is, due to the whisky monoculture that
 we were faced with at the time. Younger consumers do not just buy brands, they buy into a certain lifestyle and they are much more curious and open to the unknown. They look at a spirit from various aspects.”

Simon’s Gin is projecting double digit growth over the next five years

Millennial demands

High on the checklist of millennial wants and needs are, he says, premium quality and handmade products, details on terroir and provenance, health or clean-living attributes and clear identification with those values associated with ‘craft’ spirit makers. Telser reports good organic growth off the back of all of these.

Gin and rum are enjoying similarly strong performances with growth and total volume sales of rum ranking second only to whisky in 2014, while the appetite for British gin shows no signs of abating. Last summer,

SB reported that the UK exported a record- breaking £394 million worth of gin during 2014. Premium names such as Hendrick’s are doing brisk business in Germany, as are home-grown cult brands like Simon’s Gin from Bavaria and Monkey 47.

Produced by Black Forest Distillers GmbH, Monkey 47 Schwarzwald Dry Gin sets out to “unite great British traditions, the exoticness of India, and the purity and nativeness of the Black Forest”. A 47-ingredient recipe combines native Black Forest herbs and cranberries with exotic Asian botanicals and its super-premium status among German gin fans is such that Pernod Ricard has just agreed to buy a majority controlling share, with a view to growing business in and outside of its homeland.

The ‘craft’ craze

Even tiny ‘craft’ distillers like Simon’s Gin are projecting double digit growth of 20%+ per year over the next five years, and this is without a secure foothold in retail or the on- trade. Unable to lay out cash for bar merchandise or reprinted price lists, many such emerging brands are finding it hard
to compete with the major players in the more commercially-led establishments.

Other, more liberal-minded folk embrace them with open arms. BRYK Bar, an upmarket nightspot in Berlin’s Prenzlauer Berg district, welcomes a crowd aged between 30-50-years-old (“people with both legs in life already,” quips owner Frank Grosser) and opens – unusually in this town – for after-work apéritifs until late.

Grosser loves craft gin and niche spirits so much he created his own, a 43% abv gin produced exclusively for BRYK Bar by the Kullmann Distillery in Loburg, Brandenburg, and is sold on site, online and through independent retailers such as trendy InBesterGesellschaft, located a few streets away.

“The reason behind our spirits selection is that from the beginning we said we want to be different as much as possible, in all kinds of ways,” he explains. “I want us to have products which are rarely seen in other bars as well as being still affordable for our guests.”

Grosser, himself a millennial consumer at 33-years-old, has an international perspective on drinks and cocktail trends. He learned his craft working in bars and five star hotels in Vienna, Vancouver, St Moritz and Nice. While his fledgling business goes from strength-to-strength, his fellow Berliners are taking longer to catch on than the city’s hipster reputation might lead one to believe.

“In Berlin restaurants you can eat fantastically every single day but high-end, quality bars are unfortunately very rare,” he states. “There’s still a lot of space to improve.”

“Frankfurt am Main, the financial city, as well as Hamburg have more educated customers who are interested and enjoy high quality bar establishments. Berlin is still way behind because Berlin people
are actually just fine with the way they get treated and do like [hospitality] rough and unfriendly. High quality is more than serving a great drink in a clean glass, it’s about service. This is a bar set up like a gourmet restaurant.”

Imbibers are happy to pay a premium for something that is rare and refined

Food for thought

True, Berlin is full of foodies and it seems people have caught on to the experimental gastronomy scene quicker than they have the non-beer bar scene, but the venues that are winning out are those innovating between the two.

Le Croco Bleu, around the corner from BRYK Bar on Prenzlauer Allee, takes an identical stance on the presentation of cocktails as holistic taste experiences, pairing liquor with complementary edible accompaniments to produce serves worthy of being lingered over. Yet chef de bar, Phum Sila-Trakoon, disagrees with Grosser that Berlin’s millennials are slow on the uptake.

Conversely he sees a rapidly growing appetite for Le Croco’s creative menu, where each drink is served with a “happy spoon” on the side of perhaps a home-baked chocolate biscuit with mascarpone, a trilogy of berries and Japanese wild cress.

Says Sila-Trakoon: “If we reflect on the last few years you see that a lot more customers are in
 position to say, ‘I would like to try something new and it’s OK for me to pay a lot more for that.’ So cocktail bars offering the quality are more interesting now in Berlin than other cocktail bars.

“We changed our concept last summer, which was interesting for us because we sold a lot of gin and tonics, as this is still the favoured long drink here in Berlin [something of a specialist subject for Le Croco Bleu, selling as they do 124 gins and 15 different types of tonic].

“We weren’t sure whether people would stay for one drink, two drinks or more but now we’re serving every cocktail, including classics like Martinis and Old Fashioneds, with the spoon.
“It’s a lot of preparation; the use of craft and ideas [about] what we’re doing, but it’s turned out really well. Before that we had cocktails selling at about 43% and we have increased that to 83% in the last six months. So people are open-minded for cocktails and the way that cocktails are prepared.”

French fancy

This all stacks up with European research findings which place health and well-being as a priority for younger and older Germans alike, many of whom are feeling the after effects of too many beers and Jägerbombs.

People are taking longer over their drinks, limiting consumption to maybe two or three a night. They’re happy to pay a premium for something that is rare and refined, or crafted by hand using artisanal or regionally sourced ingredients, to be enjoyed in more salubrious surroundings than the typical underground dive bar.

Half private lounge, half 1960s board room, Les Fleurs du Mal –
the latest launch from legendary Munich-based bar entrepreneur Charles Schumann – is the very epitome of current. Inspired by his travels to Tokyo, this minimalist low-lit room sits above Schumann’s Bar am Hofgarten, one in a group of four highly regarded Munich venues.

The bar can host up to 30 drinkers at a time, usually aged roughly between 25 and 50 years, around one 9m- long polished wood table manned by two expert bartenders.

The French-themed drinks list changes every couple of weeks and speaks to the international bar credentials and creativity of the owner. Unusual, regional spirits combine with fresh ingredients to produce original recipes such as the Pot de Miel (€11.50): Slovakian Bentianna (a low- alcohol blend of honey, herbs, grape juice and Tokaji wine) blended with Normandy liqueur Bénédictine D.O.M., cidre de pomme, lemon, honey and egg white.

There’s also an extensive whisky collection, featuring hard-to-find, in demand Japanese expressions and a “Collection des Ports”, served alongside small-plate bar food. Les Fleurs attracts a crowd of regulars who are happy, and positively welcomed, to stay all night.

“Everybody told me this bar wouldn’t work,” says Schumann, “because you have so many people sitting close together that they do not know. But it is not like this; they sit and talk together and it really is a good idea. And so many people know what they’re drinking now and have ideas [about] what they want to drink. It’s not like 40 years before when people chose cocktails 
by colour.”

With the help of such learned, cosmopolitan clientele, Schumann has almost single-handedly skewed the drinking culture of one of the planet’s biggest beer cities, spawning numerous copycat outfits led by bartenders who trained at his side.

And if the Müncheners can be persuaded to set down their stein, there’s surely a whole world of liquid delights waiting in store for the rest of Germany’s young, experimental drinkers.