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Business

Crying in Your Beer

German Beer Day on April 23 celebrates Germany's famous Reinheitsgebot, or beer purity law, which was established in 1516. Unfortunately the country's proud brewing tradition hasn't helped the industry compete globally.

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The German beer market is firmly in foreign hands.

Germans love beer, there's no doubt about that. Nearly every town or region has its own particular take on what is affectionately called "liquid bread" here. The Reinheitsgebot, set down by Bavarian Duke Wilhelm IV, allows beer to be made from only hops, barley and water. It's a guideline that has served brewers who care about their product well over the centuries.

Making beer may not have changed radically over the past 500 years, but the beer industry certainly has, which is today big business on a global scale. And that's why German brewers have little reason to raise a mug of their favorite amber suds in celebration this Friday of German Beer Day.

The country's fractionalized and provincial attitudes towards brewing -- according to Germany's Federal Statistics office, there were 1,268 registered breweries in 2003 -- has led to the creation of a mindboggling variety of beer.

Takeover targets

But it has also made brewers easy targets for large foreign beer conglomerates looking to snap up bargains with growth potential. In particular, Belgium's Interbrew has been actively snapping up German brands, including the proud Bavarian house Spaten, which had been independent for over 600 years. Interbrew also owns Germany's ubiquitous Beck's beer.

Dutch brewer Heineken started the raid on German beer makers in 2001 by buying half of Munich-based Schörghuber-Gruppe, which makes Paulaner, Hacker-Pschorr and Kulmbacher beers. That encouraged Interbrew to go on an acquisition spree that started with Beck's and quickly added Diebels and Hasseröder before crowning things off last year with Spaten. Not to be left out of the action, Danish group Carlsberg took over the Hamburg-based Holsten brewer at the being of 2004.

Beer Business

For many German beer aficionados, having their favorite drink sold off to the makers of what they consider inferior brews is humiliating, but Spaten head Jobst Kayser-Eichberg places blame squarely with those in the German brewing industry.

"No global vision, provincial thinking, fantasies about staying independent and also pure vanity on the part of the German beer barons hindered mergers that could have led to a globally expanding German brewer," Kayser-Eichberg told the Associated Press.

Consumption declining

He also noted declining beer consumption in Germany as a reason why local brewers will need a strong international partner to help increase export sales. According to the Munich-based Ifo institute, Germans drank only 118 liters per capita last year, compared to 122 liters in 2002. Back in 1997 the Germans swigged down on average 131 liters. That means Germans are now only the third biggest beer drinkers in Europe, falling behind the Czechs and the Irish.

Schwarzbier

Despite all the problems, the biggest insult for German beer lovers is perhaps yet to come. During the 2006 World Cup, which Germany is hosting, German beer is likely to be banned from the country's stadiums because U.S. beer giant Anheuser-Busch has a sponsoring agreement with soccer's international governing body, FIFA.

On the brighter side, at least Germans probably don't have to fear that Interbrew or Heineken will try to supplant regional favorites with mass-produced foreign beers. Michael Dietzsch, head of the second largest still German-run brewing concern Bitburger, believes peoples' local preferences are too strongly set for that.

"That's why foreign investors are buying German market brands and aren't trying to sell their own here," Dietzsch told the German news agency DPA.

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