Veltins boss Michael Huber: “No beer without gas”

However, brewers are dependent on glass bottles, the production of which is heavily dependent on gas. “The German brewing industry needs around 900 million new beer bottles to maintain the returnable cycle,” emphasizes Huber.

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Mr. Huber, during the Corona period, pubs were closed and public festivals were forbidden. Beer consumption, which has been shrinking for years, fell to an all-time low in 2021. Have Germans forgotten how to drink beer during the pandemic?
The Germans are learning how to drink beer again. In the two years of the pandemic, sales in Germany have fallen to 69 million hectoliters. In 2021, around 250 million less beer mugs were drunk than in 2019. Since there have been events and festivals again, the desire to drink beer has increased immensely. We feel an uncanny need to catch up. The beer business in the catering trade is picking up significantly, while at the same time sales in retail are weakening after the special boom in the lockdown.

In the pandemic, the industry predicted that brewers would die out. But you hardly hear about closures now. Did the Corona aid work?
Many breweries only survived the pandemic thanks to the Corona aid. Now the aid is gone, but sales are a long way from recovering. Added to this is the immense cost pressure, which means a considerable risk for many brewers. The industry still has a rocky road ahead of it well into 2023.

What has become more expensive for the brewers?
Brewing beer is more expensive than ever. Energy is the most important ingredient in brewing. Electricity on the futures market has become more expensive by 280 percent within a year; on the spot market, where brewers have to buy, by 210 percent. The price of natural gas has increased by 340 percent in the last twelve months. The malt price has doubled. Only the price of hops has remained the same due to good harvests. Cardboard boxes are 40 percent more expensive, films 50 percent more expensive. The cost explosion affects everyone in the industry, not just Veltins.

Higher cost is one thing, but do you get all the raw materials?
Euro pallets, for example, have become scarce as a result of the Ukraine war. Special nails are missing. The price has risen from 11.40 to 23 euros in one year. A madness. Availability is the biggest problem today. Fixed delivery contracts are of little help here. Some suppliers prefer to give the goods to those who pay more.

How does Veltins counteract this?
In order to remain able to deliver, we have built up a substantial stock of glue and labels for 30 million euros. We have rented extra warehouses for this. However, many small breweries lack the financial strength to do so. Regional brewers in particular are still at risk. You cannot compensate for all higher costs with higher prices.

The beer at the Wiesn will cost up to 13.80 euros this year. The Brewers’ Association recently declared that beer must be up to 30 percent more expensive. Will beer become a luxury drink?
I think a 30 percent price increase is excessive – even if this were justified. But then sales would drop even more. In times like these, we brewers have to lower our standards and live with lower margins.

“Of course we are worried that people will save”

Veltins already raised the prices in April. Is that enough?
The crate of Pils with 20 bottles now costs one euro more. That’s an increase of about six percent. Trade and gastronomy would probably not support a further price increase this year. This obstacle should apply to the entire brewing industry. On the contrary: the trade is worried about customers and therefore advertises with sharp special offers that we brewers cannot influence. But if the cost situation does not ease again, Veltins will also have to think about higher prices next year.

The Germans are becoming more and more price-sensitive because of inflation. Will consumers in future tend to buy cheap beers instead of premium brands like Veltins?
After the financial crisis in 2008, there was a shift towards cheap brands, which we don’t feel at all at the moment. Veltins actually grows very well. Brands are still in demand. Beer has a lot to do with emotions. Whoever buys Veltins or other premium brands will not switch brands because of an extra euro per crate. But of course we are concerned that people will save.

What does the Ukraine war mean for the industry?
The gas shortage is causing us even more concern than a possible new corona wave in autumn. If there is no Russian gas, we would have a serious problem.

The second alarm level of the gas emergency plan has already been declared. How dependent is the brewing industry on natural gas? And how do you prepare for an emergency?
No gas, no beer. Brewhouses need a lot of energy and are mainly operated with gas. Veltins has purchased an oil supply for five weeks in order to switch from gas to oil in an emergency. However, we brewers are extremely dependent on upstream suppliers.

The glass industry, for example, cannot work without gas. Veltins alone needs around 50 million new bottles every year. The entire industry needs around 900 million new beer bottles to keep the reusable cycle going.

>> Read here: Long ways for beer bottles: This is how breweries undermine their own reusable system

The government wants to ensure the supply of food. But is beer of all things systemically relevant?
The Federal Network Agency’s decision hangs over us like the sword of Damocles. We cannot yet estimate whether consumers will have to do without beer in an emergency. For us this is unimaginable! But what can still be calculated today? Uncertainty has never been so great.

You have been managing the Veltins private brewery as general representative for more than a quarter of a century. While beer consumption is falling, Veltins has grown against the trend. Their sales in 2021 were even higher than before the pandemic. How did you manage that?
We don’t rest on our laurels. Veltins has always had a stable financial situation because the sole owner, Susanne Veltins, generally leaves the profits in the company. This enabled us to start investments in good time. By 2024 we have invested over 400 million euros in the brewery. We have built new bottling plants, logistics centers, sewage treatment plants and a new brewhouse. We work very cost-consciously and constantly optimize our processes. Veltins has a good range of products, a motivated workforce and a valuable brand. That is why we are also growing significantly in the first half of the year.

“There is fierce cut-throat competition on the beer market”

Unlike some competitors.
Fierce cut-throat competition prevails on the shrinking beer market. Many brands have been losing volume and image for years. Veltins output, on the other hand, has grown by 15 percent over the past ten years, and sales by almost 30 percent. Among the premium brands, we are firmly in third place behind Krombacher and Bitburger. However, both have lost significantly in volume in recent years.

But not all beers do well at Veltins either. The mixed beer drink V+ declined, as did non-alcoholic beer and shandy. And the retro variety Grevensteiner Landbier has also lost.
An innovation reaches its peak at some point and is replaced by another. V+ is mostly geared towards young adults and is showing encouraging growth again after the lockdowns. Our Helles Pülleken, which we launched in the middle of the pandemic, is our most successful launch ever. Most importantly, the parent brand thrives. We have been growing with Veltins Pils for 17 years.

With Fabian Veltins, nephew of Susanne Veltins, the sixth generation entered the operative business in July. Should he one day run the brewery?
Fabian Veltins is trained in the industry, also internationally. He is now responsible for our draft beer business throughout Europe. He doesn’t take on an easy job. The last name doesn’t help at all. We train him and see if he has what it takes to manage the company later. Everything is still open there.

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You will soon be 73, at that age others prefer to play golf. In addition to Veltins, you have also successfully managed the lighting manufacturer Trilux for 17 years. How is it possible to be successful in two such different industries?
I don’t know anything about electrical engineering or brewing, but Trilux and Veltins run anyway. Because it doesn’t matter whether it’s beer or lights, the rules of the game for good corporate management are the same everywhere: A company’s greatest asset is its people. Many bosses get caught up in micromanagement and don’t take the time to inspire and build their people. That’s where I see my job as boss. When I visit a company and the porter is grumpy, I know immediately: something is wrong in the shop.

Is it true that you don’t have a computer?
I don’t have a PC, but get the current figures emailed to my cell phone several times a day. Since the pandemic, I also have a tablet for video conferencing. Wednesday is our decision day at Veltins, that’s when everyone in charge meets. At Trilux we make decisions on Tuesdays and Thursdays. So I get by with a four-day week in total. If that’s too much for me, I’ll give up.

In 2024, Veltins celebrates its 200th anniversary. By then, the brewery will have been completely renovated. A good time to hand over to your designated successor, Volker Kuhl?
We mustn’t overestimate ourselves. 2024 is a good date. At Ms. Veltins’ request, I can then switch to the Supervisory Board. Volker Kuhl and I have been working together for 27 years and trust each other blindly. Of course, I have the ambition to hand over a company that is also running.

Mr. Huber, thank you very much for the interview.

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