Beer and roller skates
Not many beer brands can say that they once asked Andy Warhol to promote their pilsner. But when Warsteiner underwent a re-branding in 1984 the German brewer did just that. The pop-art icon presented them with a simple but striking image of three of their classic flute-shaped glasses frothing with their famous beer. It might seem an unorthodox way to flog beer to German drinkers, but the kooky idea is typical of the 261-year-old brewer – now in the ninth generation of family control under 35-year-old Catharina Cramer – for demonstrating a striking mix of tradition and innovation.
At heart, nothing could be more traditional than a brewery business in the small picturesque northwestern-German town of Warstein, where the church spires are the tallest structures. And Warsteiner certainly has its fair share of history. The business dates from 1753, when Antonius Cramer – a farmer who was an enthusiastic brewer on the side – started producing more than the limit for home brewing and had to start paying brewing taxes. This cottage industry quickly grew and in 1803 the family opened its first business, a combined brewery and pub, in the centre of town.
In the second half of the 19th century the coming of the railways opened up new markets and the family modernised, creating a state-of-the-art steam-driven factory. Production remained in the centre of the town until the 1970s when they moved the brewery to a vast, modern facility on the outskirts of town that turned Warsteiner from a regional player to a national powerhouse. In 1984 Warsteiner became the biggest brewer in Germany, in terms of volume produced. These days it is still the fourth biggest.
But behind this story of German hard work and solidity, Warsteiner has a slightly anarchic side and likes to go against the grain. Although the latest Cramer is the first woman ever to be on the management team, the company has long had a deeply feminist feel. During the 1930s, when the Nazis preferred to portray women as mothers, Warsteiner came out with a series of advertisements showing liberated, attractive women enjoying a glass of the cold stuff.
Those flute-shaped glasses that tickled Warhol’s fancy were a deliberate attempt to undermine the image of beer as something only drunk by thirsty working men from a stolid stein. Beer has elegance and refinement, those adverts say. Warsteiner was one of the first brewers to push the idea that beer was something that could be enjoyed with food, rather than a simple thirst quencher. Look through the old publicity materials and you can see that Warsteiner sees its beer as something closer to champagne than industrially produced lager. (Cramer, of course, enjoyed a glass of beer for the cameras when she married in 2012). Flashy minimalist packaging adds a touch of high-fashion glamour. A further layer of uniqueness is added when you find out that Warsteiner sponsors, of all things, competitive hot-air ballooning.
Put this together and it’s hard to avoid the conclusion that the family thinks this business is – whisper it – quite a lot of fun. Serious, of course, but there is something a little Willy Wonka-ish about it. Cramer says that as a child “one of our favourite activities was to go roller-skating in the brewery all the way to the cafeteria. Those hallway floors were so nice and smooth.”
The business was inextricably linked with the family’s home life, and Cramer grew up within touching distance of the mash tuns. “My parents’ home is located directly next to the brewery,” she says. “As children, we basically grew up on the grounds.” Despite the early education it was never a done deal that she would join the firm, she says. Her two older sisters were offered the job of taking over from their father, Albert. “As the youngest of three sisters, I was not necessarily in line as a successor,” says Cramer, “However, since both my older sisters decided not to pursue a career in the business, my parents asked me. And I immediately said: ‘yes’.”
A thesis on American light beers while studying at the European Business School in London may have helped prepare her for the role. Experience working for companies such as JP Morgan in London and family-controlled drinks business Pernod Ricard in Cologne certainly did. She joined Warsteiner aged just 27 in 2005, and took on a number of roles in different departments to learn the ropes.
The accession to the top job was perhaps not quite plain sailing. When she started working for Warsteiner, a non-family chief executive was leading the business and many assumed that he would take it over, but he left unexpectedly. (The company denies the rumour that he fell out with her father, Albert, or was pushed out so a family member could take over). The transition started a few years ago, but was accelerated when her father died at the end of 2012, at the age of 69.
Fairly or not, the first thing that might strike you about Cramer is that she is a woman in what is – despite Warsteiner’s feminising attempts – seen as an industry largely populated by men, that sells a product to men. Does her gender make a difference? “I never had a problem in our company,” Cramer says. “Many of the older employees know me from when I was a young girl. In the industry itself, it was a bit more difficult, not only as a woman, but simply being a young person, who sees some things differently and acts accordingly.”
So far, she seems to have handled things well. She recently had to steer the company through its first major setback since she took the hot-seat when there was an outbreak of Legionnaires’ disease at the brewery, something which closed down production for a few days, but which appears to have had little effect on the business. The source, it seems, was elsewhere, but the potential damage to a business whose reputation is based on purity is obvious. Their beer, like most German beer, is made in accordance with the famous Reinheitsgebot purity laws of 1516, which says that only water, barley and hops can be used in the production of beer. Perhaps wary of giving hostages to fortune, she declined to talk about the outbreak.
Hiccups like that aside, what is the state of the business that Cramer has taken over? Its past speaks for itself, but what does the future hold? Although you would have thought that selling beer to Germans was a sure-fire winner as a business idea, these are testing times for German brewers. Images of people drinking vast glasses of beer during the Oktoberfest are still a German cliché, and the country’s chancellor, Angela Merkel, makes a virtue of being photographed drinking a pilsner from time to time. But people no longer believe the adage that Das bier ist gesund, zu jeder Stund (beer is healthy at any time) and the flussige brot – or liquid bread – is not considered an acceptable breakfast drink. There are two reasons: beer consumption is decreasing because people are more health-conscious, but also the population is ageing and the core drinking demographic of 18 to 34-year-olds is smaller than it was.
The German beer market is, if not in crisis, then changing. Warsteiner won’t talk about profits, but the revenues look healthy – €530 million in 2012, on sales of 4.56 million hectolitres of beer. But like other German brewers Warsteiner has adopted several strategies to ensure its survival. “In German, we have the expression, ‘Wer rastet, der rostet,’ [if you rest you rust] or in English one would say, ‘A rolling stone gathers no moss’,” Cramer says. “We always try to stay current and offer our customers innovative new products.” At the start of the year they introduced a double-hopped alternative to the classic Premium Verum pilsner, called Warsteiner Herb. They also make a cola and various lemon drinks, as well as an alcohol-free beer. They make an isotonic drink for sports, and hired top-flight boxers the Klitschko brothers to promote it. Of course, although pilsner is their best seller, Warsteiner also make other beers, such as the traditional German dunkels and weissbiers.
Geographical expansion might seem an obvious route but this is hard for German beer brands, says Tom-Arne Rüsen, managing director of Witten Institute for Family Business at the University of Witten-Herdecke. “We have these strong, local and mostly family-owned brands that are strongly rooted in their regions, where they are the number one, and no other beer brands can enter into those markets,” he says. “There are very few countrywide brands.” One way that brewers have expanded outside their home regions is by buying businesses in other regions. Warsteiner was an early adopter of this tactic. In the early 1990s it bought a brewery in Paderborn. In 2001 it bought the König Ludwig Schlossbrauerei in Kaltenberg, in 2005 the Frankenheim Brewery in Düsseldorf and in 2007 the Herforder Brewery.
It is also one of the few German beer brands to make a real effort to establish a presence overseas. Warsteiner says that its beers are available in more than 60 countries, with a mixture of exports and local businesses brewing under license. It runs several breweries in Africa and set up one, CASA Isenbeck, in Argentina in 1994, which it sold to SABMiller in 2010, who agreed to continue brewing Warsteiner in the country. Over the past decade it has also made a huge effort to make its more local exports easier, building a railway track that allows Warsteiner to export directly to Berlin by rail. That is in addition to existing rail links to Munich and Verona, and the factory itself has an amazing 4.9km of railway track.
Would the family ever sell the brand? Highly unlikely, says Rüsen. “Beer is a very emotional product in Germany and the family is very linked into the brand,” he says. “The beer often has the family’s name, the family brand and the business brand mutually work together.” The Becks business was sold to Interbrew in 2002 for €1.8 billion, but it is an almost unique case. It’s true that beer consumption is declining, but from a very high level. With their strong local markets, the German breweries are extremely solid businesses. Wisely, though, Warsteiner is not resting on its laurels and, like other family-owned beer brands in Germany, it has spread its bets by diversifying into other businesses. The Warsteiner Group consists of 120 companies, which include wholesalers, a country inn and a pub, and the Welcome Hotel chain.
Intriguingly, Rüsen suggests that having a woman at the helm – and especially one who recently had her first child, a son – might help to modernise Warsteiner. Her father had a reputation for being a classic patriarchal manager, like many male leaders of his generation, working long hours and centralising decision-making. Female successors in family businesses, Rüsen says, have unique challenges, but are also uniquely positioned to change things. “We have done a lot of research into female successors and we have found that they have a specific challenge when they are mothers,” he says. “There are times when the child just wants mummy. That means that if you are a women manager you have to organise things differently. Sometimes you have to skip a meeting, you are not the chief executive any more, you are mummy and you have to go.” Unlike female bosses in other businesses, those in family businesses have the clout to actually change the way a business works to create a more modern working pattern that better fits Generation Y’s desire for better work-life balance. Female family business heads, in other words, are at the cutting edge of modern management.
Cramer says she wouldn’t be averse to her children taking over the business in the future. “Of course, I would be happy, if the 10th generation decides he or she wants to take the helm at some point,” she says. “But it is mostly up to them; they really need to want it. It is not always easy to persevere in such a difficult field as the beer market. One needs to be really committed to it, with all your heart and soul.” Better dust off the roller-skates.
