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FOOD & DRINK

German brewers fear business going flat as gas crisis looms

The soaring cost of energy and the threat that Russia could cut gas supplies to Germany risks worsening beer makers' post-coronavirus, the German Brewers Federation said Monday.

A man holds a beer in Perchting, Bavaria, during traditional May Day celebrations.
A man holds a beer in Perchting, Bavaria, during traditional May Day celebrations. Photo: picture alliance/dpa | Matthias Balk

Having limped through the pandemic, the “German beer industry is still working in crisis mode”, brewing federation boss Holger Eichele said.

German brewers sold 157.2 million litres of the amber liquid over the first six months of the year, a 3.8 percent annual increase, according to figures published by the federal statistics office Destatis on Monday.

But despite the improvement, the first-half figure was still 5.5 percent below its pre-crisis level of 2019.

A looming energy crisis in Germany left little hope of a further improvement in sales in the second half of the year, according to the German Brewers Federation.

Energy prices have soared as Russia has dwindled supplies of natural gas to Germany and prompted fears of an acute shortage were it to cut off supplies completely.

“Without gas the shelves will be empty,” Eichele said.

READ ALSO: Cost of beer in Germany could soar ‘by up to 30 percent’

The scale of the energy crisis and its impact “can only be guessed at”, he added.

Brewers had endeavoured in recent years to reduce their energy usage, but it was currently “impossible” to replace gas as the most important source for the industry, Eichele said.

According to the federation, the food and drink industry is the largest consumer of gas in Germany behind the chemicals industry.

Brewing involves a number of energy-intensive processes from roasting the malt to heating the brewing tanks. The rising cost of energy is also passed on through suppliers, such as the producers of glass bottles.

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ENERGY

German Chancellor Scholz wants gas pipeline linking south and central Europe

Chancellor Olaf Scholz said Thursday he was seeking to shore up interest among European partners for a gas pipeline funnelling energy from southern to central Europe, as Germany scrambles to wind down Russian energy.

German Chancellor Scholz wants gas pipeline linking south and central Europe

“I have been very active in talks with my two colleagues in Spain and Portugal, but also the French president and the president of the European Commission in advocating that we should take on such a project,” he said.

A pipeline running through Portugal, Spain and France to central Europe is “conspicuously absent”, the chancellor told journalists.

If it existed, it would “now make a massive contribution to relieving and easing the supply situation”.

Energy exporter Russia’s invasion of Ukraine has upended the power market, sending prices soaring and countries scrambling for supplies.

Germany has been looking across the world to make up for an energy shortfall after Russia curtailed exports to the European economic giant, which has been heavily reliant on Russian gas.

Energy bills for German households are expected to double in the next months, while industry has also warned earnings would be hit by the power crunch.

Scholz did not give further details on the pipeline he was eyeing.

READ ALSO: Germany’s Scholz pledges more relief for lowest earners

A project called Midcat to link Portugal, Spain and France was launched in 2013, but it drew opposition from environmental groups and work was halted in 2019 when financing fell through.

In the wake of the Ukraine conflict, European Commission chief Ursula von der Leyen has called for the resumption of the project, saying it carries geopolitical importance.

The Spanish government is also favourable about resurrecting the pipeline project.

However, it is not keen to contribute to the estimated €440 million in financing needed as the project would not directly benefit Spain.

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