Krombacher Group hits record high with 4.8% growth

View over the Krombacher Brewery
Our brewery in the idyllic valley of Krombach

•    Krombacher Group’s sales exceed 700 million euros for the first time.
•    Krombacher Pils strengthens its position as Germany’s bestselling Pils brand.
•    Alcohol-free brands growing steadily.

Krombacher Group’s sales hit record high. Production more or less stable.
The Krombacher Group closed the business year with a very good result. The Group’s sales rose by 4.8% to a new record of 702.9 million euros. This was the 15th year in a row in which the Group was able to post an increase in sales. Over the last 15 years, the Group’s sales have risen by nearly 280 million euros altogether; this represents a spectacular increase of 66%.

The sales of 702.9 million euros correspond to a total output of 6,577 million hl. This means that despite the price adjustments that had to be made in October 2013, the Krombacher Group’s sales remained almost stable and nearly reached the previous year’s figure of 6,619 million hl.

Krombacher brand family still growing
In October 2013, the ex works selling prices had to be increased to accommodate rises in raw material costs, energy costs and personnel expenses. The sales generated by the Krombacher brand consequently rose by 30.7 million euros to 598.4 million euros (+ 5.4%; previous year: 568 million euros). The total output amounted to 5,469 million hl, just 0.65% down on the previous year (5,505 million hl).

Sales of the Schweppes Group’s non-alcoholic brands were up 4.9% on the previous year, rising from 84 million euros to 88.5 million euros. Despite the price increase, the total output rose by 9,000 hl (+ 1%) to a record high of 876,000 hl (previous year: 867,000 hl).

The Krombacher brewery’s gastronomy business bucked the negative market trend and beat the previous year’s output of 701,000 hl by
0.7% (705,000 hl). The Group succeeded in convincing businesses in the gastronomic sector to continue serving Krombacher Hell, Krombacher Dunkel and Krombacher Weizen, which led to a positive result. This means that Krombacher prevailed against the trend on the gastronomy market, which disclosed growth figures of minus 4–5%.

International business also developed positively. Krombacher International passed the 200,000 hl mark for the first time. The output figure for 2014 was 201,000 hl, 7.4% up on the previous year. Sales for other brands fell from 19 million euros to 16 million euros. The current output is 232,000 hl (previous year: 247,000 hl); the decline is due above all to the closure of the Eichen brewery in Kreuztal-Eichen. Employee numbers rose to 968 (previous year: 959).

Krombacher Pils undisputed market leader
Last year, Krombacher Pils consolidated its position as Germany’s most popular, bestselling Pils brand, even though the quantity sold decreased by 111,000 hl. The output of Krombacher Pils reached 4,250 million hl (previous year: 4,361 million hl). This decrease is due to losses incurred as the result of the price increase; at times, consumers also showed a preference for Krombacher Hell, Dunkel or Weizen. Nevertheless, Krombacher Pils succeeded in maintaining its position as the undisputed market leader with a market share of approximately 10% (source: Nielsen) in 2014. Every tenth Pils drunk in Germany comes from Krombach.

Marked increase in sales of Krombacher Alcohol-Free
Alcohol-free beers are still growing in popularity. In 2014, the production of Krombacher Alcohol-Free reached a record high of 348,000 hl (previous year: 333,000 hl). This means that output grew by an impressive 4.5%. The exceptional taste of Krombacher Alcohol-Free is attracting more and more consumers who enjoy refreshing isotonic drinks. Krombacher Alcohol-Free is the clear market leader with a market share of approximately 20%. Tens of thousands of runners experienced the outstanding taste of Krombacher Alcohol-Free at the Haspa Hamburg Marathon in 2014 and at many other events.

Krombacher Radler – Germany’s no. 1
The output of Krombacher Radler was 15,000 hl (3.4%) up on the previous year, reaching an impressive total of 450,000 hl (previous year: 435,000 hl). Krombacher Radler’s market share of just under 20% puts it well ahead of its competitors, which follow at a considerable distance. One in five shandies drunk in Germany comes from Krombach.
Krombacher’s alcohol-free Radler leads the market for alcohol-free shandies. At 24.9%, it holds an even larger percentage of this segment.

Krombacher Weizen slightly down
The growth curve for Krombacher Weizen moved steadily upwards since its market launch in 2008. In 2014, however, output of Krombacher Weizen dropped by 13,000 hl to 228,000 hl (– 5.4%); this is the first time that the brand has ever posted minus figures. The development is mainly due to the fact that competitors in the Weizen segment did not increase their prices. In contrast, Krombacher Weizen Alcohol-Free is attracting many new consumers and closed the year more than 5% up on the previous year. In 2015, Krombacher Weizen-Radler will be renamed “Krombacher Weizen-Zitronen Naturtrüb”. This will position it unambiguously in the dynamically growing market segment for mixed drinks containing wheat beer.

Specialities in demand – Krombacher Dunkel
In 2011, the strong Krombacher brand family was expanded to include the malty, spicy Krombacher Dunkel. After the successful product launch in the gastronomic sector, Krombacher Dunkel was positioned in the retail sector in 2012 to cater to the growing consumer demand for dark beers. In 2014, the output fell by 10,000 hl to 40,000 hl. This was due to the losses resulting from the price increase and a deliberate decision not to advertise in the discount segment. The fact that some test buyers subsequently switched to other Krombacher varieties such as Krombacher Hell certainly also played a part.

Launch of Krombacher Hell followed by successful first year
Krombacher Hell has been on the market since February 2014, and its launch significantly exceeded all expectations. A gratifying total of 64,000 hl was sold during the first year, making it the market leader in the light beer segment in its home territory of North Rhine-Westphalia. Krombacher Hell is a mellow, palatable beer that is attracting an ever-growing target group: male and female consumers aged over 20 who prefer less bitter beer. The successful brand communication with Matthias Schweighöfer will be continued in 2015, and more innovative packaging will create additional new sales stimuli. We are looking forward to summer 2015, when we will see whether the pale beer segment will become established nationally in the long term.

Alcohol-free harbingers of success in the soft drinks sector – KROMBACHER’S DRAFT BEER is market leader
KROMBACHER’S FASSBRAUSE has cornered the market in the Fassbrause beer segment with a market share of 25.3%. Output increased by another 4,000 hl in 2014, bringing the total to 89,000 hl. The much-acclaimed taste and the independent manufacturing process guarantee its market success. As a “real” Fassbrause, naturally produced with malt and not with alcohol-free beer as is the case with many of our competitors, KROMBACHER’S FASSBRAUSE is obviously different and stands out from its many competitors. It contains 0.00% alcohol, placing it firmly in the soft drinks category rather than among the beer mix drinks. This differentiates it from most of its competitors and makes it suitable for children. In 2015, the successful 0.00% alcohol campaign will continue with new images.

Other brands
An output of 232,000 hl was recorded for the other brands, which include Eichener, Rhenania Alt, Rolinck, Cab and Vitamalz (previous year: 247,000 hl). This figure no longer includes any output from Iserlohner Gastro GmbH; the closure of the Eichen brewery also led to losses.

Alcohol-free Schweppes brands record successful growth
The Schweppes Group with its alcohol-free brands Schweppes, Orangina and Dr Pepper posted increases in both sales and output despite the price increases. Schweppes output grew by 17,000 hl, equivalent to an increase of 2.4%. This puts Schweppes’ total output at 718,000 hl (previous year: 701,000 hl). The Russian Wild Berry variety and the new bittersweet beverages from Schweppes Fruity were both major factors in this growth. A new TV campaign, the revision of product packaging and the new containers are all boosting sales in the growing premium lemonade segment.

Orangina disclosed a slight loss amounting to 4,000 hl resulting from the price increase and the deliberate reduction of commercial campaigns; its output for the year amounted to 101,000 hl (previous year: 105,000 hl). The same applied to Dr Pepper, the American cult brand, where output was also down 4,000 hl, putting the total output at 47,000 hl.

Opportunities for further growth
The Schweppes Classic varieties in the high-quality 0.2-l Alice bottles are now available in practical packs of four. With this multi-pack, Schweppes is now offering a small and attractive recyclable package that meets the demand for smaller package sizes. These package sizes are ideal for mixing cocktails. The launch of a high-quality 0.33-l sleek can for all the main varieties of Schweppes has also given the brand new momentum, as it is now addressing new target groups.
The Orangina brand will be relaunched in 2015: the unique 0.25-l “Bulby Bottle” – one of the brand’s trademarks – will also be available from traditional food retailers. The complete revision of product packaging and a new generation of boxes will help boost sales. A new poster campaign will also get under way during the summer months.
Dr Pepper’s new Dr Pepper Energy drink is a world first, as Germany is the first and currently the only market where this energy drink is available. The 0.5-l cans are distributed in trays of 12 via Drinks & More and were made available to all customers at the end of November 2014. With a growth rate of almost 8%, the German energy drink market is a field in which Dr Pepper will now be able to hold its own.

Positive stimuli from investments in 2015
Krombacher will continue investing in the company’s future in 2015. The construction of a high-bay storage system in Littfetal will guarantee the Krombacher brewery’s ability to deliver in the long term and allow for the increasingly seasonal nature of many products. At approximately 25 million euros, this construction project is one of the biggest investments made in recent years.

Three “small” and six large new beer tanks were installed in November 2014. The preparations for the construction phase began early in 2014; commissioning will begin in spring 2015. This measure for expanding the brewery’s capacity was necessary in view of the wide range of products now available. The new varieties also require fermentation and storage space to ensure that all beverages in the product portfolio are kept ready for filling. The creation of new fermentation and storage cellar capacities will now guarantee the company’s deliveries in the long term and generate corresponding growth. The investment volume of this project is approx. 12 million euros.

A combined heat and power unit will also be constructed on the company’s premises in 2015. The Krombacher brewery’s goal is to generate enough electricity to cut its consumption of purchased electricity by up to 20%. Protecting resources, environmental sustainability and climate friendliness are the cornerstones of the company’s electricity and heat supply concept. Security of supply will also be increased. current utc time Krombacher’s combined heat and power unit is scheduled for commissioning at the beginning of April 2015.

Uwe Riehs, Director of Marketing at the Krombacher brewery, is looking forward to the new year: “We are optimally positioned for 2015. Our high product quality, the notable strength of our brands and our great passion for our Krombacher, Schweppes, Orangina and Dr Pepper brands will keep our company growing in the long term.”

Krombach, January 2015