There is no doubting that 2003 has been a bad year for middle-sized enterprises in Germany. The state of the economy and the effects on consumer confidence have cut the profits of big companies and have backed smaller firms up against the wall.

One sector that has particularly suffered is the German beverage industry, where consumption figures have been falling for the past few years. However, one company stands out as an example of how to cope in such difficult times.

Year-end celebrations at Rothaus

The Badische Staatsbrauerei Rothaus, situated in the idyllic green meadows and dark fir forests of Baden in the Black Forest, may not be everyone’s idea of a cut-and-thrust enterprise, but the makers of "Tannenzäpfle" beer have made such progress this year that they gave their employees a bonus of three months pay.

So how are the clever brewers managing to drive their company fortunes up at a time when many of their counterparts are heading downhill?

Turnover continues to increase

It could be that, even in an economically stunted environment, people will buy the products they like. And "Tannenzäpfle" is very popular. Thirty or forty lorries, each carrying a load of 30,720 bottles of the speciality Pils beer, leave the small brewery every day destined for bars and shops across Germany. Despite the fact that the Rothaus brew is expensive in comparison to the products of other locally owned breweries, the company turnover grows about five to nine percent every year with net sales of 28 percent.

“These are very rough times for the breweries,” said one employee at the Rothaus brewery in an interview with DW-WORLD. “For the past ten or twelve years, many have had to live with losses, year in and year out. For a company in this sector to not only be a success but to double its profits, that doesn’t happen on its own.”

U.S. trend showing in Germany

A spokesperson at the German Brewer’s Association told DW-WORLD that a trend similar to one in the United States could be the reason behind the rising popularity of "Tannenzäpfle". “It appears that Germany is heading more and more towards the situation we see in the United States, where only a few suppliers influence the beverage industry,” said the spokesperson.

“The bigger the corporations becomes, the more impersonal and anonymous their beverages get. The Rothaus brewery success is a sign that consumers are moving away from that and appreciating regional specialities again,” he added.

Brewery offers emotional connection

“We rely on a number of factors here, such as sympathy and identification,” said another employee. “The fact that we are a small company operating from the heart of the Black Forest transfers to our products. In an industry like the beer market, which is saturated with brands, you must offer more than the primary need to extinguish thirst. An emotional connection needs to be made so the consumer says, ‘I buy the beer because I associate certain values with it.’”

The Black Forest location of the Rothaus brewery conjures up the perfect imaginary vista for the beer drinker: the wide open countryside, green and fresh on warm summer days, log cabins and woolly sweaters in winter.

Sterotypes used in beer's favor

The "Tannenzäpfle" label uses these traditional values and stereotypes to its advantage: the rosy-cheeked “Schwarzwaldmädle” hostess in local costume looking like she has just stepped out of an East German Red Riding Hood illustration.

The company lends itself to the ideals of the traditional brewery, another factor that endears it to the seasoned beer drinker: the brewers use traditional techniques and they work hard. As for advertising, television spots are taboo.

The image of the beer, for the time being at least, is secure with “native country” products continuing to be trendy in the bar scenes of Hamburg, Cologne and Berlin. For now, "Tannenzäpfle" of Baden is the exotic beer of choice in German hostels.