Stefan Fritsche, who runs a centuries-old German brewery in Neuzelle, near the Polish border, has seen his natural gas bill jump a startling 400 percent over the past year. His electricity bill has increased 300 percent. And he’s paying more for barley than ever before.
But the soaring inflation for energy and grains in the wake of the Ukraine war is no match for the biggest challenge facing Mr. Fritsche’s brewery, Klosterbrauerei Neuzelle, and others like it across Germany: a severe shortage of beer bottles.
The problem is “unprecedented,” Mr. Fritsche said. “The price of bottles has exploded.”
The issue is not so much a lack of bottles. Germany’s roughly 1,500 breweries have up to four billion returnable glass bottles in circulation — about 48 for every man, woman and child.
Customers pay a surcharge of 8 euro cents on each bottle, and get that money back when it is returned.
While the returnable-bottle system is climate-friendly and appeals to Germans’ obsession with recycling, it comes with one major problem: getting people to return their empties.
Dragging a crate — or several — of empty glass bottles back to a store can be a hassle, even if it means getting back the deposit fee. So people tend to let them stack up, in the basements of their homes or on the balconies of their apartments, biding their time until they are running out of either space or spare cash.
“It is deadly for small brewers,” Mr. Fritsche said. The brewery he runs sells 80 percent of its beer in bottles. (In 2003, a recycling law was expanded to focus on reducing waste in the beverage industry, meaning most beer sold for the domestic market is in returnable bottles, not cans.)
Holger Eichele, who heads the national brewers’ association, has taken to the airwaves and social media in recent weeks to urge Germans to return their empty bottles. Beer makers don’t want to run short of bottles as summer approaches, when hot weather, backyard barbecues and festivals drive sales.
The war in Ukraine has exacerbated the problem, making it more difficult and expensive for brewers to buy new bottles to make up for the shortfall.
While brewers buy their glass from a number of countries across Europe, the war has caused glass factories in Ukraine — previously an important supplier — to cease operation. Sanctions have cut off supply chains from Russia and Belarus.
The price of bottles produced elsewhere, including in the Czech Republic, France or even Germany, has reached record levels of 15 to 20 euro cents each, because glassmaking involves huge levels of heat, and energy prices have soared.
Breweries without long-term supply contracts are seeing a price increase of more than 80 percent for new glass bottles, the German Brewers’ Association said.
A recent article in Germany’s biggest-circulation newspaper, Bild, proclaimed that “Germany is running out of beer bottles,” sending shock waves through the country and leading Mr. Eichele to run damage control to prevent panic buying.
June 10, 2022, 1:29 a.m. ET
“We do not see any danger that beer production will have to be curtailed,” he insisted. “To put it bluntly, supplies to consumers are secure.”
Still, the industry is facing a broad variety of problems, including a shortage of truck drivers and high fuel costs. “It is becoming increasingly difficult for breweries and the beverage trade to maintain the supply chain,” Mr. Eichele said.
Prices for label paper and other raw materials have also increased. The cost of each wooden pallet that breweries stack with crates of beer so they can be loaded and unloaded with forklifts has risen to about 25 euros from 17 euros, said Ulrich Biene, a spokesman for Veltins, one of the country’s largest breweries.
“The whole pricing structure is out of control,” he said.
As a result, Veltins raised the price it charges for a 20-bottle crate — the most common way that beer is sold in German liquor stores and supermarkets — by a euro, up to nearly €19.50, its first increase in three years. The country’s largest brewer, the Radeberger Group, which owns Radeberger and Schöfferhofer beers, also increased prices this spring by €8.50 per hectoliter of beer, an increase of about 6 percent. That translates to consumers paying between 32 and 63 cents more per crate.
To encourage more people to take back their bottles, Mr. Fritsche has toyed with the idea of nearly doubling the deposit that customers pay on their reusable beer bottles, to 15 cents. But larger brewers argue that increasing the deposit price is not the solution because they have too many bottles in circulation and that it would be a complicated process.
Russia-Ukraine War: Key Developments
Mr. Fritsche has kept the prices of Klosterbrauerei Neuzelle beers steady so far, but said he expected they would have to increase this year, like so much else in Germany, perhaps as much as 30 percent. German inflation climbed for the fifth consecutive month in May, reaching 8.7 percent year over year.
Germans are already straining under record inflation. Retail sales of food and drink in April fell 7.7 percent from March — the largest monthly drop since 1994 — and asking customers to pay more to cover the cost of their bottles would not be fair, Mr. Biene of Veltins said.
Instead, his brewery is encouraging customers to clear out their basements, balconies and garages and take their empties back to be washed, refilled and returned to circulation. Of the roughly one million 20-bottle crates that Veltins owns, only 3 to 4 percent are at the brewery.
“If people go away and leave their empties stacked in their garage, then we could run into trouble,” Mr. Biene said. “Every empty crate that comes back prevents us from having to buy a new one.”
Germany ranked fifth in the world for per-capita beer consumption in 2020, according to an annual survey by Kirin, the Japanese brewer. (The United States ranked 17th.) But on the whole, Germans are cutting back. Since the Federal Statistics Office began keeping records in 1993 — a year after Mr. Fritsche’s family took over the brewery in Neuzelle — national consumption of beer has dropped nearly 24 percent, as people embrace a wider diversity of soft drinks.
Lockdowns surrounding the coronavirus over the past two years also contributed to the trend, as bars remained closed and sporting and cultural events were canceled.
The difficult environment makes management of the breweries all the more important. Mr. Fritsche said he had relied for decades on a combination of tradition and creativity.
A willingness to push the boundaries and think around the corner is essential to surviving in a tougher business environment, he said. For example, the brewery has a bottle of its signature product, Schwarzer Abt, or Black Abbot, that has been blessed by Pope Francis. The bottle is now dipped into each fresh batch of Schwarzer Abt.
What helps, too, is taking a long view of the history that comes with running a business founded in 1589, the events that it has witnessed and withstood over time.
“Nazis, Communists, government takeovers — in the past, we’ve had just about everything here,” Mr. Fritsche said. “And we have survived it all. We will get through this as well.”
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