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Krombacher profits bubble up thanks to soft drink sales

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Krombacher profits bubble up thanks to soft drink sales
Photo: DPA
17:16 CET+01:00
German beer company Krombacher has managed to tap into greater sales using soft drinks, and in so doing bucked the trend of falling profits across German breweries.

In the past year, a 0.8 percent increase in output by the Kreuztal-based company has caused sales to froth up by 0.7 percent, reaching a head of €647.2 million and almost 6.4 million hectolitres in total drinks.

Krombacher CEO Uwe Riehs stated Wednesday in Düsseldorf that the strategy introduced in 2006 to grow the brand beyond beer and into the a fuller range of drinks has been paying off, as soft drinks are what have been driving profits for the firm.

Soft drinks brands Schweppes and Orangina, freshly acquired as part of the 2006 strategy, topped off Krombacher's profits for 2010 with an additional 4.3 percent.

Krombacher brand products themselves also helped to increase output for the company by 1.5 percent to almost 5.3 million hectolitres.

Lighter brands such as Krombacher Radler and Krombacher Alcohol-free boosted the overall output, with 9.4 percent and 8.0 percent increases respectively, while the traditional Pilsner lagged behind with a mere 0.3 percent.

However, with a 30 percent drop in profits for the beer-cola mix drink Cab, it seems that the vogue for such drinks appears to have fizzled out. Large investments appear to be counterproductive, due to the short lifespan of new products in this area. As such, lighter brands such as Rhenania, Eichener, Vitamalz and Rolinck have ceased production.

All in all, Krombacher appear to be heading off the competition in their field. According to government statistics, domestic beer sales for 2010 tanked at a total of 1.7 percent and 98.3 million hectolitres, despite the boost of the 2010 World Cup.

Krombacher anticipates no end to the downward trend in German beer consumption in the near future.

“The demographic shift - declining birth rates combined with an age increase - will sink the amount of beer consumed per-head,” said Krombacher's director of marketing, Stephan Maubach.

As such, the company looks set to continue its expansion into the world of soft drinks beginning soon with a campaign for the three alcohol-free beers currently on the market.

DAPD/rm

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