Norten-Hardenberg A ruined castle on craggy rocks, including a creek – a backdrop painted for a whiskey distillery. However, it is not in the Scottish highlands, but at the foot of the Harz mountains.
Not far from Göttingen, the Beverbach Single Malt German Whiskey has been distilled here for a few years. “We have grain, water, a distillery – a whiskey is close at hand,” explains Carl Graf von Hardenberg, tenth generation of the spirits manufacturer Hardenberg-Wilthen, the origin.
Gin (from Hallers) and vodka (Kinetic) are now also produced at the company headquarters in Nörten-Hardenberg. The strategy of the family-run distillery with 323 years of tradition: whiskey, gin and vodka can be marketed better internationally than typical German spirits.
In addition: “A premium whiskey is much more profitable for us than, for example, Korn,” says the 34-year-old. The already small margins for the bulk business from brandy to grain are becoming ever tighter in times of cost inflation. Good whiskey is far more expensive due to the long maturation process – and customers are far less price-sensitive.
“The demand for German premium whiskey is growing rapidly,” confirms Michaela Habbel, President of the Association of German Whiskey Distillers. In Germany there are now around 300 whiskey distilleries, in Scotland only around 120. However, the amount produced in Germany is significantly lower, according to Habbel. Leading brands include St. Kilian and Slyrs.
Weinbrand Goldkrone benefits from the “Jägermeister Effect”
“Tradition and innovation – that has been our recipe for success since 1700,” explains Graf Hardenberg. The distillery dared something new with the head of a wild boar as a heraldic animal shortly after reunification. In 1992 the family took over the Wilthener wine distillery in Saxony, also a traditional company.
In the GDR there were only two major manufacturers: VEB Nordbrand Nordhausen for clear spirits and VEB Weinbrand Wilthen for brown spirits. With the takeover of the distillery, sales more than doubled.
The entrepreneur manages the production and export of the spirits manufacturer Hardenberg-Wilthen in the tenth generation.
(Photo: Hardenberg-Wilthen AG)
At that time, 27 million bottles of the Goldkrone brand were filled in Wilthen each year. The brandy is still well represented in the German market, but the sales volume has shrunk to eight million bottles due to the category. According to the company, the somewhat outdated eastern brand is now benefiting from the “Jägermeister effect”. “The retro boom surprised even us. Goldkrone is very popular in the German hip-hop scene,” says Hardenberg.
Korn and brandy were the core business of Hardenberg-Wilthen AG until 2012, alongside liqueurs such as Danziger Goldwasser or Kleiner Keiler. Then the family business entered the import business. “The Korn and Brandy categories declined, which we compensated for with other spirits such as vodka, rum or gin,” explains Hardenberg. Shortly thereafter, the catering business was added. Today, the Lower Saxony sell foreign brands such as Bloom Gin, Templeton Rye or The Dubliner Irish Whiskey.
Every German drank an average of 5.2 liters of spirits in 2021. Per capita consumption has been falling for years, according to figures from the Federal Association of the German Spirits Industry (BSI). Manufacturers and importers made sales of around 4.75 billion euros in 2021 – including around two billion euros in alcohol taxes.
“We can no longer rest on our laurels in the home market”
With around 720 million bottles of 0.7 liters each, the German spirits market was still the largest market in the EU in 2021. But domestic brands are finding it increasingly difficult to assert themselves against international spirits. The preferences of Germans have changed: “In the spirits industry there are trends towards well-known German brands, towards premium products, towards imported products, but also towards crafts,” says Angelika Wiesgen-Pick, Managing Director of the BSI. In other words: less, higher quality, more expensive.
Korn has been distilled in Nörten-Hardenberg for 323 years.
(Photo: Hardenberg-Wilthen AG)
“We can no longer rest on our laurels on the home market, which has become too small for domestic manufacturers,” says Hardenberg. “That’s why we’re working hard on expanding into export markets.” The family business used to be number two in Germany. Today, after Nordhausen, Henkell Freixenet and Berentzen, it is one of the relevant producers in the German spirits market. The turnover including alcohol taxes is 115 million euros. Hardenberg does not reveal more about the current figures. “We’ve always been profitable,” he says.
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However, the company had to register short-time work for many of the 152 employees during the pandemic. Because the catering business and exports were almost completely eliminated. Otherwise, up to 15,000 visitors come to the distillery every year. The pandemic successfully switched to online tastings. The internationally renowned castle tournament for show jumpers has been suspended until further notice due to the pandemic.
Rising costs are shrinking margins
Even more drastic than Corona are the effects of the Ukraine war. The mix of higher costs and reluctance to buy in times of inflation means that the margins, which are manageable anyway, are shrinking. The prices for almost everything – from neutral alcohol, sugar to glass – have risen significantly. “That really cost us money,” emphasizes Hardenberg. For February, he was able to push through single-digit price increases for volume brands. “In the case of premium brands, we want to cushion the additional costs ourselves for the time being.”
The distillery of the Counts of Hardenberg at the foot of the Harz mountains has been distilling grain since 1700. Up to 15,000 visitors come every year.
(Photo: Hardenberg-Wilthen AG)
With the outbreak of war, Hardenberg immediately stopped exporting to Russia. “Two full containers were already on the ramp in the yard, but luckily we didn’t have any big business there.” However, the Lower Saxony company has also sold 500,000 bottles of Baikal vodka from Russia each year. Only leftovers are sold off. Because Russian vodka was a slow seller, its own premium vodka brand, Kinetic, benefited.
Non-alcoholic spirits increasingly popular
Alcohol-free spirits are also on the rise. “There’s going to be a huge market there,” Hardenberg believes. He distributes the well-known Australian brand Lyre’s in Germany. It offers non-alcoholic alternatives to spritz, gin and whiskey, for example. The Lower Saxony are also in the process of developing alcohol-free variants. “It’s not easy because there’s no alcohol as a flavor carrier,” says Hardenberg, who regularly conducts tastings lasting several hours with his team.
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Another problem is the short shelf life. Alcohol-free alternatives can only be enjoyed for eight to twelve weeks after opening. However, the trend that the company has been driving from the start is very lucrative. “Non-alcoholic spirits are a highly profitable business,” says Hardenberg.
The spirits mature in large wooden barrels.
(Photo: Hardenberg-Wilthen AG)
The shelf price of alcohol-free alternatives is similar to that of regular spirits, although no alcohol tax has to be paid. For a 0.7 liter bottle with 38% volume, this is 3.47 euros. Hardenberg doubts whether these prices for alcohol-free variants can be maintained in the long term.
The distillery will remain a family business in the future. Father Carl senior sits on the supervisory board and is mainly responsible for hotels such as the Freigeist and the Burghotel. The son is responsible for production and export from Hardenberg-Wilthen and is the owner of the holding company. After studying business administration, Carl von Hardenberg worked in an Irish distillery. When he joined the family distillery in 2016, his father was already on the supervisory board. “We always looked at the handover very soberly,” he says.
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