The price of a liter of beer at Oktoberfest has never been higher.But that didn’t stop people from being enthusiastic, and they were willing to pay €14.40 for one aspect Pilsner beer offers important clues about consumer confidence in Europe’s largest economy.
Jörg Biebernick, CEO of Paulaner, one of Germany’s largest breweries, learned the hard way how big this year’s Oktoberfest will be. One recent night, he tried to book a table for a group of friends but was told he had no chance. “The tents are fully booked,” he said. “This is despite inflation.”
Biebernik was speaking at the Paulaner Tent, a vast hall at Munich’s Theresienwiese playground where thousands of liters of beer are handed out daily to revelers, many of whom wear leather pants and dresses. By noon, the tables were full and the orchestra was firing on all cylinders.
But “at 8.30pm that’s when things really kicked off,” Biebernick said. “This is an exaggeration.”
Germany has been stuck in an economic downturn for more than a year, with energy costs soaring, stifling the country’s initial post-pandemic recovery.
The outlook remains bleak. The country’s leading economic think tanks jointly forecast on Thursday that gross domestic product will shrink by 0.6% this year. This spring, they said it would actually grow 0.3%.
Oliver Holtmoeller of the Halle Institute of Economics said the recovery in German industry and private consumption was “slower than we expected in the spring.”
Stubbornly high inflation is hurting ordinary citizens, rising interest rates are crippling the construction industry, and uncertainty caused by the government’s erratic energy policy is hurting sentiment in German boardrooms, researchers say.
But there is a glimmer of light: Germany’s purchasing power is growing, think tanks say. Energy prices have fallen from their 2022 highs, while export prices have risen strongly, suggesting that companies are successfully passing on price increases to international customers.
However, the most important factor is rising wages. Incomes are set to rise overall, thanks largely to the government’s introduction of the Jobseeker’s Basic Allowance late last year and plans to increase pensions in 2024.
“Transfer income such as wages and benefits will increase significantly in the second half of 2023 and will be even stronger next year,” said Stefan Kooths, director of the Kiel Institute for the World Economy.
“This means more purchasing power will flow to private households, thereby boosting consumption-related economic sectors.”
Data released in August showed that Germany’s wage growth rate in the second quarter reached a record 6.6%, which is the highest growth rate since records began in 2008.
This puts annual wage growth in Germany above the country’s consumer price inflation rate for the first time since 2021. Household incomes appear to have finally caught up with the cost of living.
“Private consumption has been very weak, which has caused real problems in the past, especially at the beginning of this year,” Coos said. “But now things are changing.”
Inflation pressures also appear to be easing, with the annual rate falling to 4.3% in September, the lowest in two years. It was 6.4% in August.
This year’s Oktoberfest proved that people are in a better mood.By the halfway point, some 3.4 million people had participated in the event meadowsAccording to local reports, there were 100,000 more visitors than in 2019, when guests spent a whopping €1.25 billion on drinks, food and playground equipment.this meadows The first weekend attracted 1 million visitors, compared with 700,000 last year.
A stark contrast to 2022. “Last year was the worst weather I’ve ever experienced,” said Andreas Steinfatt, head of trade, marketing and regional brands at Paulaner. “It rained 14.5 out of 17 days and the temperature never rose above 12 degrees. You need to wear a scarf.”
Munich is in the Indian Summer this year, and the sun is shining almost every day. The outlook isn’t entirely bleak, however—prices are at all-time highs.
“Everything is going to be more expensive this year,” Bibernik said. The price of a liter of beer ranges from 12.60 euros to 14.90 euros, an increase of 6.1% compared to last year. A plate of pork knuckle, a traditional Oktoberfest dish, costs 25 euros, up from 20 euros in 2019.
Brewers say they have no choice but to pass on higher input costs. “The price of malt and hops has doubled in the past two years,” said Christian Dahnke, Paulaner’s brewmaster. Sugar is also more expensive, as is the cost of canned aluminum.
But Bibernick said no one seemed bothered by the extra cost and he expected 7 million liters of beer to be drank during the 18-day festival.
“I don’t think people will be deterred by the high prices,” he said. “In any case, Munich’s purchasing power is the highest in Germany, if not Europe.”
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