Consequences of the fall of the Purity Law (Reinheitsgebot) for the German beer market

Date of publication: June 15, 1990

Company: Nielsen

Abstract:

In the following investigation a yet topical subject is taken up, namely the possible consequences for the beer market arising from the verdict of the European Court of Justice to repeal the purity law. The German beer market is a fragmented market in which over 1,1 suppliers offer more than 4 products. An information campaign launched by the brewers' association as well as references to the purity law in beer advertising have explained the differences between German and foreign beer to the consumers, subliminally indicating that foreign beer is generally made of chemical ingredients and unhealthy. This (incorrect) interpretation led to the situation that imports stand no chances in the German market if not brewed according to the purity law, so reference is made voluntarily (perforce) to this fact in advertising for all imported beer. Even after the repeal of the purity law, foreign investors have no chances in the German beer market if they do not comply with the respective regulations. The fact that hardly any investments are made in the German beer market by foreign brewers (apart from those already serving the market) after the 1987 verdict does, however, not derive from the purity law, but exclusively from the unsatisfactory profit situation. As long as higher profits can be made in other countries, even the considerable potential of the German market is of no interest to investors. Yet there are still chances in the German beer market if investors do not expect to sell large quantities or become market leaders except in niches. In spite of the dislike of foreign beer, premium import beers have an excellent image, although their advertising budgets are rather modest compared with competitive German brands.

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