Berlin In tranquil Alt-Kaulsdorf in the east of the German capital, the Berlin air is mostly fresh and clear – like the peppermint liqueur of the same name. 70 years ago, entrepreneur Sergei Shilkin came up with the recipe for the spirit in the brick factory.
In the club scene, Berliner Luft has become a cult drink in recent years – similar to the traditional Jägermeister before it. Students and tourists spread the mint liqueur from Berlin throughout the republic. Company boss Erlfried Baatz explains the success of Berliner Luft like this: “If people drink beer, whiskey and schnapps together while partying, they will eventually get bad breath. If you still have plans, you can refresh yourself with our mint liqueur.”
But spirits manufacturer Schilkin is currently going through challenging times. During the pandemic, bars and clubs were closed for almost two years, and folk festivals were cancelled. In the pre-Corona year 2019, a good third of the turnover of around 35 million euros (including alcohol tax) came from the catering business. In most supermarkets, too, customers have been looking in vain for Berlin air for a long time. “Apart from Markant, Metro and Netto-Stavenhagen, we are currently out in the entire food retail trade,” explains the 66-year-old.
The dispute began in 2020 with Edeka, Germany’s largest supermarket chain. “We wanted to increase prices in the single digits, after all we had invested in new bottles and boxes,” says Baatz. Edeka refused. The dealer did not comment on request.
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When the contracts expired, Schilkin stopped supplying. The same game was repeated with Rewe, Lidl, Aldi and Kaufland. “Even though we bring young, well-funded customers into the stores,” Baatz marvels.
Price war of David against Goliath
“We’re just a small medium-sized company, not a multinational corporation that could somehow blackmail the dealers,” says the Schilkin boss, who doesn’t want to give up, angrily.
Because customers kept asking questions in the supermarket, more than 400 independent Edeka dealers are now selling Berliner Luft again, according to the manufacturer. “You buy directly from us or from specialist dealers.”
Baatz had not shied away from confrontation with Edeka before. As head of the Henkell sparkling wine cellars, he was the spokesman for the sparkling wine industry against abusive “wedding discounts”, which Edeka had demanded from suppliers in 2009 for the takeover of the Plus discount chain.
Spirits manufacturer Schilkin and its 60 employees kept their heads above water with short-time work during the pandemic. Sales, which collapsed sharply in the first year of Corona, fell slightly in 2021 to 22 million euros (including alcohol tax). New foreign markets saved the business. In Austria and Switzerland, the company sells successfully and at higher prices – also in retail.
Baatz is relieved that the catering business is now picking up significantly again. While 50,000 mini bottles of Berlin air were sold a month during the lockdown, it’s now a million. “There is no better economic barometer than mini bottles,” the company boss is certain.
The manufacturer Schilkin sold a million mini bottles of Berliner Luft every month before the pandemic.
(Photo: Shilkin)
The Schilkin family business has already experienced many crises. Apollon Zhilkin started producing vodka in 1900 in St. Petersburg. After the October Revolution, he moved to Berlin, where he re-established the spirits factory in 1932. His son Sergei was expropriated in GDR times and continued to run the state-owned company as an employed general manager.
Schilkin was one of three spirits producers in the GDR who distilled everything from vodka to brandy to Korn. East Germans consumed more than 16 liters of spirits a year. Today, Germans drink 5.2 liters per capita, according to figures from the Federal Association of the German Spirits Industry.
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After the fall of the Wall, Sergei Schilkin got his company back at the age of 70. Because it was difficult to compete with Western brands, he specialized in private labels for discounters. “Large quantities at low margins,” says Baatz, who knew Schilkin from the association.
Baatz played in a different league in the industry for almost three decades. The doctor of business administration, who actually wanted to become a professor, managed the sparkling wine and spirits manufacturer Henkell, which belongs to the Oetker family. In 2013 he was promoted to personally liable partner of the Oetker Group. Shortly thereafter he was appointed to the head of the Oetker brewing group Radeberger. But after only four months it was over. Baatz was dismissed because of “differing views on the strategic orientation of the Radeberger Group”.
Berliner Luft saved itself from bankruptcy
In 2014, Schilkin hired the ex-Oetker manager as a consultant. When he saw the numbers, the company immediately filed for bankruptcy in the protective shield process, says Baatz, who is now also a shareholder. The company phased out its loss-making private label business. Sales shrank significantly.
Schilkin concentrated on Berlin air. Although only about 100,000 bottles were sold a year at the time, Baatz saw potential in the brand. He introduced variations such as chocolate, cold coffee, glitter or ice candy. Annual production rose to seven million 0.7 liter bottles.
“Peppermint liqueurs have clearly gained popularity and are in line with the spirit of the times,” confirms spirits expert Jürgen Deibel. “Mint refreshes and awakens spirits, everyone knows the aroma from childhood.” For Deibel, it is fascinating how Berliner Luft, as a local traditional brand from the capital’s hip bar scene, has successfully spread abroad.
“Erlfried Baatz came at exactly the right time,” says Patrick Mier from the owning family and managing director of production at Schilkin. He characterizes Baatz as a “creative, driven perfectionist”.
But not all ideas caught fire. An alcohol-free Berlin air was not pursued further. “Spirits without alcohol taste like cucumber water,” says Baatz. New variants are still important. Recently, in cooperation with the dragee manufacturer Piasten, chocolates with Berliner Luft came onto the market. The mint liqueur with liquorice flavor will be available soon. Ice with Berlin air is also conceivable.
The peppermint liqueur is available in different flavors.
(Photo: Shilkin)
“We don’t pay influencers, but the Berliner Luft brand still goes viral,” says Baatz. “It is very important for our target group that we are vegan and gluten-free.”
The competition from Smirnoff to Berentzen is also trying to jump on the mint liqueur wave. The market has so far been dominated by Berliner Luft and the green “Pfeffi” from Nordhausen, whose roots go back to 1954. Today, the brand belongs to Rotkäppchen-Mumm.
Schilkin is slowly improving after the pandemic. Now, however, rising raw material costs are causing concern. The prices for sugar, labels, aluminum caps, glass bottles and packaging boxes have risen by double digits. Baatz emphasizes: “Price increases are unavoidable so that we don’t run out of air in the long term.”
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