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UniCredit Oktoberfest Analysis: Despite price increase, new record for beer consumption expected

UniCredit Oktoberfest Analysis: Despite price increase, new record for beer consumption expected
  • This year, average price per 'Mass' (one litre) stands at EUR 11.60, 36 cents or 3.2 percent more than in the previous year
  • UniCredit Wiesn Visitor Price Index (WVPI) up by 2.7 percent
  • Beer consumption reached record level of 7.9 million litres in 2018

 

 

At noon this Saturday, 21 September 2019, "O'zapft is" (the keg has been tapped) will be declared and the gates opened in Munich for the 186th Oktoberfest.

 

Prices at the "Wiesn" are due to rise again in 2019. One Mass of beer (one litre) will cost an average of 11.60 euros this year - 36 cents or 3.2 percent more than in 2018, according to UniCredit's Oktoberfest analysis: 'Oktoberfest 2019: New record high in beer liquidity?".

 

The Wiesn Visitor Price Index (WVPI), traditionally calculated by UniCredit, also shows another increase - this year by 2.7 percent. It is based on the price for two Mass of beer, half a roast chicken (or Hendl, in the local dialect) and a return public transport ticket.

 

While the price of a public transport ticket has remained unchanged, the price of chicken has increased, just like beer, by 3.2 percent compared to the previous year. Thus, Wiesn inflation is considerably outpacing consumer price inflation in Germany, which remained well below 2 percent.

 

Decreasing percentage of younger Wiesn visitors than in the past

 

Increasing prices do not seem to be discouraging those visiting Oktoberfest.

 

"Overall, rising beer prices do not seem to have an influence on the beer consumption of visitors", says Dr. Thomas Strobel, UniCredit economist and author of the analysis.

 

Strobel added: "After beer consumption surprisingly declined in 2013, the growth trend that we have observed since the mid-1990s continued in 2018".

 

One possible explanation for this trend is that Oktoberfest beer could resemble a so-called Giffen good. The rationale behind a Giffen good is that, as the price of such a good increases, the consumption of expensive substitutes becomes less affordable - especially when alternative goods are scarcely available.

Another explanation for the beer consumption conundrum could be a shift in the age demographic of those visiting Oktoberfest. Between 2000 and 2014, the number of Oktoberfest visitors under the age of 30 dropped by 17 percentage points, while the share of Wiesn visitors over the age of 30 increased by 43%. As older visitors are typically wealthier, they are able to weather the yearly increase in beer prices with more flexibility.

 

In relative terms, Oktoberfest beer is most expensive for Brazilians and cheapest for Americans and Australians

 

The Oktoberfest, which has its origins in 1810, continues to enjoy enormous international popularity. Foreign visitors to Oktoberfest constitute 14% of total attendees. Comparing the Wiesn beer price with the price of one Mass of beer in visitors' home countries, it becomes clear that those attending from Italy, Brazil and Austria spend more on each beer at Oktoberfest than they would on an equivalent measure at home. In relative terms, Oktoberfest is most expensive for Brazilians, who pay an 81% mark-up in in this context. In contrast, visitors from the US and Australia spend around 20% less on a beer at Oktoberfest.