Germany: Aldi Süd sends shockwaves through beverage industry

The test sale of beer in returnable glass bottles by hard discounter AldiSüd marks a turning point in the retail of beer in Germany. Aldi Süd, a German family-owned group with about 1.920 shops in Germany and 6.240 shops worldwide, is known for its lean structure and product portfolio and has so far always rejected to sell deposit articles in its markets due to the increased handling costs.

Therefore, the sale of beer in returnable glass bottles which was disclosed by German trade magazine Lebensmittelzeitung comes to a surprise to people close to the business and sends shock waves through the industry. On top, the test sales in North Rhine-Westphalia, the most populous state in Germany, did not relate to private label beer but instead to strong regional and national beer brands like Krombacher, Bitburger and Früh Kölsch.

Spokesmen for Krombacher and Bitburger confirmed the participation in a test with bottled beer sold in 20x0.5 liter reusable crates in Aldi Süd markets. "We have always been in favor of reusable packaging and we are happy about every dealer who offers [consumers] at least the choice," Axel Dahm, management spokesman of Bitburger told the newspaper WELT.

It is believed that Aldi wants to achieve several goals with the test:

Firstly, after years of rapid growth, hard discounts like Aldi and Lidl in Germany face increasingly competition from supermarkets like Edeka and Rewe which offer more regional products and lead in the perception of consumers in terms of environmental friendliness and sustainability.

Secondly, the German packaging law, which has been in effect for over a year, stipulates a quota for reusable packaging of 70 percent. According to the Federal Environment Agency (Umwelt-Bundesamt), however, this value is currently only 42.2 percent. While beer is still mostly sold in reusable containers (the rate here is just under 82 percent), mineral water (38 percent) and soft drinks (23 percent) are mainly sold in disposable packaging.

If the industry is not able to achieve a quota of at least 70 percent in the next two years, the legislator is allowed to issue not specified sanctions. Germany faced a similar situation in 2003, when a green party minister at that time imposed a compulsory deposit on non-returnable packaging for beer and carbonated beverages because quotas for returnable packaging were not reached. Within a very short time, the sale of beverages and cans in Germany plummeted from 7 billion to only 300,000 cans a year.

Currently, the green party is not in power in Germany but this can easily change with the next federal election in 2021. Polls show a strong support for the party which asks for an ecological change in society.

The discussion about disposable and reusable packaging is highly controversial in Germany. Although studies have clearly shown that reusable packaging over shorter distances is ecologically more advantageous, this does not necessarily seem to be true for nationwide selling beverage companies where empty containers have to be transported back over long distances.

In addition, many of the leading breweries in Germany have in recent years moved away from standard pool bottles and have introduced individual bottles with an embossed logo. Therefore, these bottles have to be returned in any case to the owner or - if returned to another bottler - they are disposed of.

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