Geographic Indications and International Trade (GIANT)
TED Case Studies
German Beer Purity Law
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Cases
CASE NUMBER: 219
CASE MNEMONIC: GERMBEER
CASE NAME: Germany's Beer Purity Law
A. IDENTIFICATION
1. The Issue
Would-be beer exporters to Germany and environmentalists
rebelled for decades against the German beer purity law or
Reinheitsgebot (originally enacted in 1516), which permitted only
four ingredients in the beverage: water, hops, barley, and yeast.
Germans claimed that the law protected public health from harmful
additives and public interest from misrepresentative advertising.
Though officially lifted in 1987 after an EC ruling, the purity
law's tradition continues in Germany. The German beer market
remains a difficult one to enter as those who want to sell
German-style, limited ingredient beer may not substitute other
ingredients. Details of the 1987 European Court of Justice case,
similar to one against a Greek brewing law, are revealed here.
2. Description
Beer is generally an alcoholic beverage manufactured in five
stages requiring malted barley, hops, yeast and water. The first
stage involves malting young barley; secondly, the brewer
extracts soluble malt with water. Next, the brewer boils the
malted barley for flavor, creating "wort." This substance is
then fermented with yeast, and finally clarified, matured and
drawn off to be sold as literally thousands of types of beer.(1)
Some brewers substitute rice, maize, sorghum, or other, most
cost-effective raw cereal for barley in the initial stage. The
German beer purity law, or Reinheitsgebot, allows no such
substitutes. Based upon Bavarian custom, an official law was
first enacted in 1516 then modified in March 1952
(Bundesgesetzblatt, or federal law) and September 1980
(Zollaenderunggesetz, or Customs Law Amendment). It originally
exclusively allowed the sale of beer with three ingredients
(water, hops, and barley) but was later revised to allow yeast.
The term "beer" carries with it certain distinct cultural
connotations. Although some evidence indicates that Egyptians
may have brewed a beer-like beverage before Christ and that other
civilizations passed down the tradition, most modern cultures
credit 16th century brewers in Bavaria, Southern Germany, to have
originated or at least modified the drink to its modern form.
Beer remains central to German culture, as Germans consume more
than 3 billion liters of beer annually, or more than 300
liters/capita, the highest in the world.
German brewers also established industries in the United
States, Mexico, China, and many other countries. Brewers
worldwide now produce countless types of beer on a formula
similar to the Bavarian one, which combined water, hops and
barley, but many add other cereals, fruit juices, or chemicals to
enhance the flavor, foaming ability, or other quality. Such
variances allow for a variety of alcoholic beverages often with
characteristics distinct to certain nations, regions, or ethnic
groups, e.g. the German bock beers, or summer brews,
significantly sweeter than most dunkel, or dark beers and
distinctively different from Belgian fruit beers, which actually
contain fermented fruit juice. (Both of the German beers above
follow the Reinheitsgebot, however.)
Beers may also vary in alcoholic content (from the alcohol-
free Clausthaler to the higher domestic German Spaten or
Warsteiner); in their packaging (from common American aluminum
cans to European bottles); and in their marketing (from American
micro-breweries and German family breweries to multi-million
dollar mega-producers in these and other countries).
Foreign competitors had complained for decades about the
unfairness of the German law and an almost identical one in
Greece (EEC case 176/84), demanding that it favored domestic
manufacturers and denied foreign businesses access to profitable
domestic beer markets, especially in Germany. The European Court
of Justice ruled in March, 1987 that the German Beer Purity Law
created intra-European trade barriers, in direct violation of the
Rome Treaty (Article 30, banning protectionism). The Court ruled
that the beer's alcohol content threatened public health more
than any otherwise legal additive, and that Germany itself
violated the law on occasion for public festivals without any
apparent health damage. The European Community's Scientific
Committee for Food and the FAO/WHO Codex Alimentarious Committee
provided the data to support the ruling. The Court forced a
national repeal of the law to balance requirements within the
then-EC, although it noted that domestic production requirements
could remain in effect (see DANISH case).
The repeal led to German consumer outcry, that lower-
standard foreign products would be allowed to invade their prized
beer market. Foreign beer producers initially expressed only
slight relief, believing the market would continue to be largely
impenetrable. More recently, the market has expanded somewhat to
include microbrewers worldwide, especially in North America, who
have adapted more traditional slow- and pure-brewing techniques
to emulate the German process and compete with German beer in
both North America and Europe (see ONTARIO case).
Related environmental concerns include the question of
purity of Germany's water supply, especially in the new (Eastern)
provinces; the stripping of fields (by raising only barley), and
potential landfill overflow if beer bottles are not properly
recycled.
3. Related Cases
ONTARIO case
DANISH case
GERMPAC case
CASSIS case
PISCO case
Keyword Clusters
(1): Trade Product = BEER
(2): Bio-geography = TEMPERATE
(3): Measure = Regulatory Standard [REGSTD]
4. Draft Author: Mari-Anne Kocian
B. Legal Clusters
5. Discourse and Status: AGReement and COMPlete
Although the various parties involved had initially
disagreed on the proper course of action, following the European
Court decision in 1987, there has been no further legal recourse.
Now action occurs in the market itself, as brewers compete for
the coveted German beer consumer with advertising and marketing
tools.
6. Forum and Scope: EURCOM and REGION
Based upon a national law, this issue attracted regional
concern because other EC member states protested that it
discriminated against non-German producers.
7. Decision Breadth: 15 (EURCOM)
This decision directly affected member states of the EC, now
the European Union, who must abide by European Court legal
pronouncements. Other trading-partners countries, such as Canada
and the United States, are also affected less directly, as they
may now gain access to Germany's beer market without following
the same strenuous guidelines as before. The American brewery,
"Samuel Adams", proudly advertised that it was the only American
brewer that met these strict requirements.
8. Legal Standing: LAW
As noted above, all EU states must follow Court of Justice
decisions as law, which supersedes their own national and
provincial law, according to provisions of the Rome, Paris, and
Maastricht Treaties and the Single European Act, EU founding
documents signed by and applicable to the 15 member states.
C. GEOGRAPHIC Clusters
9. Geographic Locations
a. Geographic Domain : EUROPE
b. Geographic Site : Western Europe [WEUR]
c. Geographic Impact : GERMANY
Although an EU-wide law, the primary affected party is
Germany, required to modify its trade standards and allow what it
had considered substandard products into the country.
10. Sub-National Factors: YES
Local German beer producers, who must continue to follow
strict Reinheitsgebot standards must now compete with large-scale
foreign companies which are allowed to substitute cheaper
substitutes in their beer.
11. Type of Habitat: TEMPERATE
D. TRADE Clusters
12. Type of Measure: Regulatory Standard [REGSTD]
The standardized product concept here deals primarily with
products which are traded among EU member states. The EU
requires that all product additive requirements be the same among
member states to eliminate unfair competition and allow states to
export their wares to neighbors within the Union.
13. Direct vs. Indirect Impacts: INdirect
The impact on trade is undeniable, as the German beer market
is the world's largest, now open to brewers around the globe.
Also, after manufacturers must change the type of ingredients
their beer includes in order to remain competitive in the beer
market, i.e., stop including only barley, this will impact the
environment somewhat as farmers switch supply crops.
14. Relation of Measure to Environmental Impact
a. Directly Related : YES BEER
b. Indirectly Related : NO
c. Not Related: : NO
d. Process Related : NO WATER
As the additive laws slacken, impure water may be included
in the brewing process. The beer-making process is directly
affected, as producers may now substitute alternative ingredients
in the first stage of production.
15. Trade Product Identification: BEER
Beer may be produced with or without alcohol; however, the
label must clearly indicate the alcohol content.
16. Economic Data
The Germans consume more than 3 billion liters of beer
annually, or more than 300 liters/capita, the highest in the
world.
17. Impact of Measure on Trade Competitiveness: HIGH
By changing the ingredient requirements, outside vendors may
now compete in the lucrative German market, from which they were
formerly excluded altogether unless they met strenuous production
standards.
18. Industry Sector: FOOD
19. Exporter and Importer: EURCOM and GERMANY
E. ENVIRONMENT Clusters
20. Environmental Problem Type: WATER
There is some possibility that as manufacturers would be
forced to all use exactly the same ingredients (as dictated under
the Reinheitsgebot), all crop area would produce the same crops
season after season and the land would be stripped. By allowing
a change in ingredients, growers may rotate their crops and sell
various crops to various beer producers. Another problem is one
of packaging/landfill use, as yet not fully estimated.
21. Name, Type, and Diversity of Species
Name: Barley
Type: Plant/Vascular/Monocots
Diveristy: 824 higher plants per 10,000 km/sq (Germany)
22. Resource Impact and Effect: MEDium and PRODUCT
If beer demand and sales increased dramatically and bottles
were not recycled, land fills could fill quickly. Also, there
would be some impact on water purity.
23. Urgency and Lifetime: MEDium and 100s of years
24. Substitutes: RECYCling
As recyclable containers are used for the product,
increasingly fewer environmental problems result. Also,
producers could use alternative ingredients in the beer, perhaps
using a cereal that specifically benefits the soil.
F. OTHER Factors
25. Culture: YES
Beer is a major feature in German culture, hence the long
history and strict standards regarding its content. German "beer
snobs" tend to disregard beverages not brewed according to the
domestic Reinheitsgebot guidelines, but foreign brewers are
beginning to find a niche in the German market.
26. Trans-Border: NO
27. Rights: NO
28. Relevant Literature
Court of Justice of the European Communities, Reports of Cases
before the Court of Justice, 1987-3, "Free Movement of
Goods: Commission v. Germany," p. 1227-1277, (March 12,
1987).
"Eurononsense: Why Brussels Sprouts," Economist, (Dec 26, 1992),
325/7791, 70-72.
Manogue, Robert, Consumer Goods, US Department of Commerce
(conversation), Washington, DC, March 1995.
Neighbors, Jim, Institute for Brewing Studies, (conversation),
Denver, CO, February 1995.
"Netherlands: Heineken moves to tap German market,"
International Management (Europe Edition) 47, (July-Aug,
1992), 21.
Suppan, Klaus and van Heidebront, Agricultural Division, Embassy
of Germany, (conversation), Washington, DC, February 1995.
van Dijk, Nico, "Dutch Beer: The World's Safest Drink?",
Europe: Magazine of the European Community (September,
1992), 319, 22-23.
References
1. Court of Justice of the European Communities, Reports of
Cases before the Court, 1987-3, "Free Movement of Goods:
Commission v. Germany," 1227-1277, March 12, 1987.
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