BESTMALZ’ 120-year track record of success is proof that tradition and innovation are not mutually exclusive.
The traditional German family malt producer is at the forefront of a recent surge in global demand for a modern bespoke beer experience. BESTMALZ location, among some of Europe’s best barley fields, coupled with their adherence to the purity guidelines of the 1516 German Reinheitsgebot (German Purity Law), appeals to cutting-edge craft brewers all over the world.
Since 2014, CEO Dr Axel Göhler, the grandson of founder Max Göhler, has spearheaded the company’s international expansion. Now, BESTMALZ distributes quality malts to more than 85 countries, including the US, China and Brazil.
Dr Göhler is uniquely suited to bring German quality malts to the world, having spent more than a decade looking at the beer industry from the outside in. He published his PhD thesis in Switzerland on the topic of German family breweries, worked for Boston Consulting Group in Germany and the US for ten years and then established a boutique private equity and consulting firm of his own in Hamburg.
Recently, Dr Göhler sat down with Tharawat Magazine to discuss BESTMALZ’ expansion, his unique perspective on the world of German family beer and the modern concept of craft.
What brought you back to the family business?
In my PhD studies at St. Gallen University in Switzerland, I examined the prevalence of family businesses in the German brewing industry. One of the lessons I learned was that many cooks don’t necessarily make a better cake. In other words, too many family members with different opinions and processes working in the business at one time can be problematic.
Before I joined, my brother Martin was the CEO of BESTMALZ, and I didn’t need to be there. However, after 2010, we changed our orientation and became much more internationally focused. Having lived in Switzerland and the US, I was a good fit for the company as it moved in this new direction, so I decided to join the business full time.
“Global brand management requires skills which are rather different from the ones in traditional malting, and we’ve been able to grow our brand considerably using these acuities”
Do you think your brother leaving avoided any potential friction that often arises in family businesses?
Not necessarily. I’d always been involved in the family business, of course, and friction between my brother and myself had never been an issue. Today, BESTMALZ has become a fairly strong brand around the world. Global brand management requires skills which are rather different from the ones in traditional malting, and we’ve been able to grow our brand considerably using these acuities; I believe we made the right decision adding a new skill profile to the business.
What else has changed since you joined?
I became a supervisory board member in BESTMALZ in 2012. This was around three years after the beer industry began to change and craft beer became increasingly sought after. However, it may have been hard for long term brewers and maltsters to see the change as it was happening. We initially thought of craft beer as an interesting alternative to standard ales and lagers but failed to realise how widespread its popularity would be. Also, we vastly underestimated the intensity of change and the financial requirements that had to be mastered if one wanted to be successful in this dynamic new business for the long-term.
Back then, my brother was focused on maintaining a ‘start-up’ culture, which was evident by the structure of the company – we simply weren’t set up logistically to be an international brand. Today, however, 65 per cent of our business is overseas, and we have 75 different malt varieties – a far cry from the five that we offered in the days when my grandfather was running the business.
Was there an overarching strategic principle behind these changes?
They happened organically as we adapted to the changing market. In family businesses, as opposed to their corporate peers, strategy is longer-term – usually at least ten years, but often much more.
We’ve always thought this way; for example, when my grandfather ran the company through the mid-1930s while Germany was experiencing a period of political and economic unrest, he derived a strategy not just for the immediate future but also for the next generation.
In the mid-80s, my father decided to acquire a tiny malting business near the Rhine river, mostly because its location seemed attractive. However, it was only 30 years later that this location became as vitally important for BESTMALZ as it is currently; today, we deliver millions of malt bags from what is now our major distribution hub. This long-term mindset is as crucial to BESTMALZ today as it was then, which is evidenced by how we responded to the rise of craft beer in the 21st century.
“There is much more to BESTMALZ than the malt itself. The areas in which we can truly innovate are logistics, customer care and IT support.”
Do you think it is difficult for family businesses to maintain a balance between tradition and innovation?
In the craft beer industry, tradition and innovation are not mutually exclusive. The malting process is lengthy and intricate; there are technical and chemical ways to speed it up, but if you’re going to retain the traditional way of developing grain into malt, which is then used to produce beer, you’re required to stick to the traditional methods.
In Germany, we cannot change them much because of the German Purity Law. For example, it’s not permitted to use any additions in the production process. Therefore, we are bound to tradition and must find ways to integrate innovation within that tradition.
There is much more to BESTMALZ than the malt itself. The areas in which we can truly innovate are logistics, customer care and IT support. Currently, we have multiple cutting-edge programmes in these fields that help us deliver exactly what our brewers and distributors around the world want.
Having said that, in our industry, there are still players that I believe have held onto the past too firmly – adhering to the old rules and failing to embrace innovation when necessary. For BESTMALZ, however, tradition and innovation are two sides of the same coin.
What trends do you see for beer drinkers?
The decline in the mainstream beer market is evident, with many traditional European beer-drinking markets, such as Germany, the UK and Belgium, experiencing an overall decrease in beer consumption. In Germany, for example, some of the largest breweries are losing sales every year, and the global craft beer movement is a positive response to that.
The opportunity available to craft beer brewers currently revolves around personal identity. An increasing number of beer drinkers are requesting products adapted to their preferences such as, for instance, beers made from organic malts, perhaps as part of a trend towards ‘healthier’ products and lifestyles. They are starting to buy products that reflect their opinions and choices, not those of a large corporate entity. Therefore, the opportunity that we, a medium-sized malt house have, lies in appealing to this identity.
“…An increasing number of people are looking to reflect their personal identity in the products and brands that they choose to purchase, and that includes beer.”
Why do you think the concept of ‘craft’ has captured the imagination of drinkers?
Again, an increasing number of people are looking to reflect their personal identity in the products and brands that they choose to purchase, and that includes beer. In Europe, one can easily distinguish between traditional beer and wine regions. Beer regions, such as Germany, have always had a certain variety of beer styles, with styles varying by region. Even with national beer consumption dropping by 25 per cent since 1993, we still have 1,300 different beer styles in Germany today. In regions with fewer options, it seems quite natural that consumers wanted more choice at a certain point.
Overall, beer drinkers and consumers in general for that matter are much more concerned with both the messages beer companies are putting out, as well as natural processes, sustainability, ingredients and quality. This is the fascination with craft beers.
Is being a family business a competitive advantage in your industry?
Yes, it certainly is. One of the most common complaints about large corporate conglomerates is that they are ‘neutral,’ with financial profit their biggest concern. It’s also hard to have any continuity in the management of these companies because people change jobs frequently, so the level of individuality and personalisation is limited.
Conversely, in a family business, where there’s much more continuity, customers are provided with security and stability – two attractive selling points. People either trust brands or they don’t. I believe that that trust is a crucial element in the history and success of any family business.
What is the future of BESTMALZ? Will it stay in the family?
It’s certainly possible. Within the family, there are talented people who may be interested in coming on board in the future. In fact, we already have plans in place. However, one of the things I discovered while researching for my PhD was that it’s extremely important not to force anyone into a role they don’t want or feel ready for, even when the rest of the family thinks it is best for the business.
Generally speaking, how the next generation fares comes down to communication and proximity. If children don’t grow up around the family business, they are less likely to see it as anything other than a money-making machine. If they are closely involved from a young age, however – even just through observation or communication – they often develop a personal association with the business and care about it on a deeper level.
It’s also crucial, in my opinion, to be prepared to have an open dialogue. This can be brutal at times, when there are difficult or controversial discussions to be had, but it also includes communicating when you’re having fun. The next generation is hardly likely to step up in the future if all they’ve heard throughout their youth are the problems and discrepancies – family business is much more than that.