Luxembourg: Brewers invest in modernizing seeing growth potential in the market

Beer is one of the few industries which has weathered the last century and even put Luxembourg on the world map. Delano examines how Luxembourg’s brewing industry is securing its future.

Luxembourg has a long brewing tradition dating back to at least 1300. At the industry’s height in the 1950s, the country boasted some 12 breweries. While today, that number has fallen to three large breweries and a handful of micro-breweries, brewers certainly see this industry as a “glass half-full” activity, investing millions in modernising their operations.

Belgian beer giant AB InBev inaugurated a new brewing facility in Diekirch for the Mousel and Diekirch pils brands on March 15. This €25 mln project, of which €12 mln went into constructing the new brewery building, was to provide a facility “for the next 100 years,” operational director Pierre Van Vynckt told Delano on March 15. The brewery was first founded in 1871 and continued a tradition begun by monks. Its founders purchased land close to the station in 1880 to expand its production and then constructed an entirely new industrial brewery in 1930. As the country is gripped in a housing shortage, the old brewery site will be transformed into flats and commercial space.

Most of the operations will be moved to the new building where the first batch of beer was started at the end of 2018. The facility, which has a capacity for brewing up to 250,000 hectolitres per year, has enabled the complex to increase its brewing operations team, from 22 to 25, in an overall workforce of 54. The biggest gain in the new facility will be in sustainability. High-tech equipment, modern installations, insulation and other features mean the brewery uses 10% less water, and will reduce electricity consumption by 15%, and its carbon footprint by 75%. The Luxembourg State was able to help subsidise some of these features but the majority of the bill was picked up by the parent company. It is not the only brewery to make its operations more efficient.

The Brasserie Nationale in Bascharage (Battin, Bofferding and Funck-Bricher ranges) announced in February that in 2018 it made water, electricity and gas savings equivalent to the consumption of 30 family homes. And further savings are expected, thanks to a €800,000 investment in two new vats. The vats allow for the automation of cleaning, collecting waste and adding yeast.

Other changes in the industry have been in the habits of consumers. “People are drinking less beer, but they are drinking better,” Diekirch general director Gilles Nackaerts said on March 15. In 2017, global beer consumption declined by 1.9 mln hectolitres, while the volume of beer brewed in Luxembourg fell from 273,671 hectolitres in 2017 to 368,221 in 2018. That has forced brewers to be more innovative about their range of products and how they market them. Both Brasserie Nationale and Diekirch have non-alcohol or zero alcohol beers in their ranges. And their lager or pils ranges have benefited from a global trend that is bringing lagers back in vogue.

Another factor shaking up the beer industry in Luxembourg is the rise of the microbrewery making craft beers. Brasserie Nationale sees the trend as a win-win for the sector, suggesting that the quality and diversity microbreweries bring to the market bring a sophistication to the product that in the past was only associated with wine-drinking.

In the past decade around a dozen microbreweries have sprung up in Luxembourg including Fox Beer, Nowhere Brewing and Brauerei Stuff.

Producing smaller volumes and with less capital to invest in machinery, these brewers have to focus on the quality produce and variety to secure their future in the industry.

Like larger scale brewing operations, microbreweries are impacted by a growing trend for drinking at home. But they also face their own challenge, namely the distribution of bar licences in Luxembourg.

"95% of bar licenses are owned by the big breweries to ensure small businesses and bar owners are sometimes forced to go through the big breweries to be able to sell alcohol. When this happens, they are then limited by what they can sell. i.e not competing brands," Stuff Brauerei’s Joseph Hallack-Wolff told Delano on March 18.

Other microbrewers like Bouneweger Brauerei, have found a way around this by combining brewing with bar or tap room (Craft Corner, in Bonnevoie).

Larger breweries are meanwhile following the wave for craft beer with Brasserie Nationale recently reviving the Funck-Bricher brand (first founded in 1764), which it merged with in 1975, to produce an organic vegan beer. Wiltz-based brewery Simon has, meanwhile, spearheaded much of the organic beer brewing trend as well as producing craft beer ranges using local produce like Ourdaller.

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