Germany – Nicky Redl

Germany makes UNESCO beer bid – WSJ

Nicky Redl — Wed, 11 Dec 2013 09:20:00 +0000

Germany takes its beer seriously, so much so that the country wants its brewing regulations recognized by UNESCO.

In a bid to honor the nearly 500-year old beer purity law and polish their product’s image, the German Brewers Federation has applied to have the law included in the United Nations’ intangible cultural heritage list.

If successful, the purity law would join a diverse list of remarkable performing arts, social practices and traditional crafts. Also on the are the Mediterranean diet, Chinese calligraphy, Argentinian Tango, Italian violin craftsmanship and poetic dueling in Cyprus.

The president of the German Brewers Federation, Hans-Georg Eils, said inclusion would be a deserved acknowledgement.

“If Germany is still regarded as the undisputed beer nation, it owes this to the beer purity law,” he said.

While Germans are enthusiastic beer drinkers, the country isn’t the big consumer it once was. According to the Brewers Federation, Germans on average drank 105.5 liters per head last year, more than 10 liters less than in 2004. Overall beer sales declined 1.7% on the year in 2012 while exports were largely stable.

Being included on UNESCO’s cultural heritage list hasn’t necessarily made Croatian gingerbread baking more popular, but Mr. Elis believes it could be a boon to German beer’s image.

“I could imagine that the title could boost export chances,” he said.

Recognition could raise the profile of German beer internationally, said Krombacher brewery spokesman Franz-J. Weihrauch but he doubts it would buoy domestic demand, where demographic factors are at play.

“The aging population means there are fewer beer consumers,” he said.

A changing professional landscape also has an impact, according to Mr. Eils, because beer consumption was livelier when more people were engaged in hard physical labor.

A spokesman for Beck’s, Oliver Bartelt, said honoring history isn’t the answer to declining sales. Instead the values embedded in the brewing law, like high quality and tradition, have to be used more in marketing.

“We don’t just sell beer, we sell emotions through the brands,” Mr. Bartelt said.

Sales may be nothing to toast, but with more than 1,300 breweries creating over 5000 brands, Germany is still the biggest producer in Europe by far, with its closest rival the U.K. producing only around half the volume.

“Germany remains a beer nation,” Mr. Eils said.

Germany’s beer purity law went into effect in 1516 in the Bavarian town of Ingolstadt. It stipulates that only water, hops, malt and yeast can be used to brew beer. Prior to the law, other ingredients commonly used included ox bile, pine roots, wormwood, oak bark, bay leaves, and henbanes – a toxic herb that can cause hallucinations and affects the heart.

Only brewers working within the regulations can call their product German beer. Mr. Eils said using only natural ingredients requires a very high level of skill, as variations can’t be compensated for with chemical additives or preservatives.

The brewers hope their pitch for law to be added to UNESCO’s list will be approved in time for its 500 anniversary in 2016.

This article was published by The Wall Street Journal – Speakeasy on December 11, 2013.

Adidas Loses Traction Against Nike – WSJ

Nicky Redl — Thu, 07 Nov 2013 17:19:00 +0000

German Sports-Gear Maker’s Sales, Profit Fell in Third Quarter

Germany’s Adidas AG ADDYY 1.19% said Thursday it posted lower sales and earnings in the third quarter, losing traction against its main competitor, Nike Inc. NKE 0.62%

The world’s second-largest sporting-gear and equipment maker said results were down because of the strong euro, among other factors, but it predicted positive feedback for coming collections and said the effect of the 2014 World Cup in Brazil should boost demand.

Net profit fell 8% from a year earlier to €316.4 million ($427 million) from €344 million. Sales decreased 7% to €3.88 billion. Both figures were in line with analysts’ expectations.

“Our third-quarter performance was negatively impacted by severe currency headwinds, unexpected short-term distribution constraints in Russia (and the former eastern bloc), as well as our actions to rebalance our inventories in the global golf market,” Chief Executive Officer Herbert Hainer said.

The company also faced a tough comparison with the year-earlier period, when the London Olympics bolstered results.

The quarterly results signaled a further setback against its U.S. rival Nike, the No. 1 sporting-goods maker by sales, which has continued to increase revenue in most regions, apart from China and Japan.

Nike’s revenue from continuous operations in the first quarter, which ended Aug. 31, rose 8% on the year while after-tax profit from continued operations rose 33%.

In recent years, Adidas has managed to narrow the gap with Nike through product introductions and acquisitions. But a stronger euro, which reduces the value of sales made in dollars and other currencies, has cut into earnings outside struggling Western Europe.

Especially on Nike’s home turf, Adidas hasn’t caught up. The German company’s sales in North America were down 5% on a currency-neutral basis, largely because a challenging golf market hurt sales at TaylorMade-Adidas Golf.

Nike, meanwhile, posted a 9% increase in North American sales in its most recent quarter.

Adidas, including its Reebok brand, now ranks third in the U.S. running market, estimated to be worth $6.6 billion. It has less than 11% of that market, behind Asics Corp. , at more than 12%, and Nike, at 54%, according to Matt Powell, an analyst for SportsOneSource. Nike also has more than 50% of the $15 billion global running market, where Adidas is No. 2.

Adidas nevertheless sounded an upbeat note Thursday, pinning its hopes on new products and enthusiastic soccer fans ahead of next year’s World Cup.

“Momentum will clearly return to our business in the fourth quarter and beyond,” Mr. Hainer said.

Analysts also said bad news should be largely out of the way for Adidas. DZ Bank analyst Herbert Sturm said the new figures packed no negative surprises.

Adidas confirmed its full-year outlook, which it lowered in September. At the time, it cut its net profit forecast to between €820 million and €850 million, compared with an earlier forecast of €890 million to €920 million.

This article was published by The Wall Street Journal on November 7, 2013.

Lufthansa Cancels Flights as Workers Strike – WSJ

Nicky Redl — Thu, 21 Mar 2013 08:16:00 +0000

FRANKFURT— Deutsche Lufthansa AG DLAKY -4.89% faced new turmoil as a strike stranded thousands of passengers in Germany and much of Europe, while local media reported that a senior executive responsible for a restructuring plan at the airline is stepping down.

Lufthansa, Europe’s biggest airline by passengers, said it canceled nearly 690 flights Thursday as staff walked out on a seven-hour strike ahead of talks expected Friday over pay and working conditions.

Lufthansa’s board member responsible for labor relations, Stefan Lauer, is set to resign June 30, German media reported. The airline declined to comment, and Mr. Lauer wasn’t available for comment.

The strike was the latest in a series of Lufthansa stoppages that have disrupted air travel in Germany in the past year and taken a chunk out of the airline’s earnings. Lufthansa is trying to bolster its finances so it can avoid jeopardizing a planned multibillion-euro investment in new, more-fuel-efficient aircraft.

In the first round of negotiations between Lufthansa and the ver.di union, which ended in February, the union demanded a 5.2% wage increase over 12 months. Lufthansa has asked employees for a two-year freeze on wages and a one-hour increase in the working week.

Strikes by Lufthansa employees and airport workers cost the airline €33 million ($43 million) last year. Lufthansa’s operating profit fell more than 36% to €524 million even though revenue increased nearly 5%, to €30.1 billion.

Lufthansa isn’t alone among European airlines in confronting angry staff as the carriers try to cope with high fuel prices, fierce competition and slack economic activity. Staff at Iberia, the Spanish unit of International Consolidated Airlines Group SA, have struck on and off to protest a restructuring plan for the unprofitable airline. A revised restructuring program accepted by Iberia employees averted strikes planned for March.

Lufthansa’s cancellations on Thursday mostly affected domestic and short-distance flights, with long-distance flights largely going ahead as scheduled. The strikes took place at German airports, in Frankfurt, Hamburg, Berlin, Düsseldorf, Cologne and Munich, and several other locations.

A Lufthansa spokesman said the strike, which the unions had announced in advance, didn’t disrupt travel as much as last year’s work stoppages because passengers had time to make alternate plans. The airline wasn’t able to estimate what the strike would cost the carrier, he said.

A work stoppage by security personnel at several airports over the past two months meant that thousands of passengers couldn’t reach their flights. Labor action by Lufthansa cabin crew last year caused widespread chaos.

This article was published by The Wall Street Journal on March 21, 2013.

Pronova Deal Is Healthy Step for BASF – WSJ

Nicky Redl — Wed, 21 Nov 2012 08:37:00 +0000

In addition to being the world’s largest chemical company by sales, Germany’s BASF will become the leading producer of concentrated omega-3 fatty acids once it’s gulped down Pronova BioPharma.

By expanding into the market for omega-3 fatty acids used in health care, BASF is following its strategy of reducing its dependence on classical chemicals.

BASF will pay Pronova’s shareholders NOK12.50 (US$2.18), equivalent to about €515 million ($659 million), an advantageous price for a sensible acquisition, analysts said.

“Due to this acquisition BASF should become the leading producer in the fast growing market for concentrated omega-3 fatty acids and cover the entire range of the omega-3 fatty acids,” analyst Nadeshda Demidova of Equinet Bank said.

BASF has commitments for about 60% of Pronova’s share capital.

Lars Hettche at Bankhaus Metzler sees the takeover offer as a positive step, noting it doesn’t look too expensive and that Pronova’s earnings margin last year was high, at around 40%.

While one trader says the acquisition is too small to cause much of a share price reaction, he agrees that the purchase price is fairly low considering Pronova’s turnover of around €230 million last year, with after-tax profits coming in at just over €20 million.

Late last year BASF said it wanted to reduce the percentage of sales generates from classical chemicals to around 30% by 2020, thereby increasing its foothold in core industries such as agriculture, construction, consumer goods, health and nutrition, electronics, energy, resources, and transportation.

In January, board member Michael Heinz said BASF aims to expand specialty chemicals for consumer-related industries through both acquisitions and organic growth.

Peter Spengler of DZ Bank believes Wednesday’s offer fits well into this strategy. “BASF is rather focusing on technology, research and development, as well as high margins, instead of high sales,” Mr. Spengler said, with regard to the company’s acquisition choices.

This article was published by The Wall Street Journal – The Source on November 21, 2012.

Reebok Problems Take Shine Off Adidas – WSJ

Nicky Redl — Fri, 09 Nov 2012 12:04:21 +0000

FRANKFURT—Adidas AG ADS.XE +0.19% has so far had a strong year as sponsorships of teams and individuals at big sporting events helped drive up sales and profit, but the world’s second-biggest maker of sporting goods behind Nike Inc. NKE +0.49% Thursday cut its sales forecast for 2012 because of further problems at Reebok.

The German company acquired Reebok in 2006, and has struggled to power the brand ever since. Most recently, Reebok lost out to Nike on a contract to supply products to the U.S. National Football League, is being hit by a player lockout in the National Hockey League and is continuing to sort out problems in India after “commercial irregularities” were discovered.

Reebok’s woes mean that while Adidas is competing strongly against Nike in Europe, Asia and fast-growing markets such as China and Latin America, it is losing ground in the U.S., the world’s biggest sports-apparel market. The group’s sales fell 4.7% in the U.S. in the third quarter, predominantly because of Reebok’s poor performance, compared with a 23% increase for Nike in North America in its most recent quarter.

“I don’t think the Adidas brand is losing ground to Nike, but Reebok is,” said Barclays analyst Julian Easthope.

Adidas said it now expects group sales to rise by a high single-digit rate in 2012, compared with its previous forecast for a rate approaching 10%. The company in September cut its midterm sales outlook for Reebok to €2 billion ($2.55 billion) in 2015, from €3 billion, but said it expected the Adidas brand to compensate.

The company’s shares were down Friday afternoon in Frankfurt as the lowered sales guidance took the shine off third-quarter results that otherwise beat the market’s expectations.

Adidas’ net profit rose 14% on the year in the third quarter to €344 million as sales rose 11% to €4.17 billion, buoyed by strong demand in Asia and Eastern European markets. The company benefited from its sponsorship of prominent teams and individuals at the summer Olympics in London and the European soccer championships. It said it expects net profit in 2012 to rise between 15% and 17% to between €770 million and €785 million.

Part of Reebok’s problems relate to an continuing dispute in the National Hockey League. Owners of the league’s franchises barred members of the NHL Players’ Association from playing after failing to reach a new deal on contracts, prompting the cancellation of all games since preseason started Sept. 19 up until the end of November, and the dispute is continuing. Reebok is the official outfitter to the league.

U.S. sales fell 4.7% at Adidas while Nike’s rose 23% in North America.

That followed the NFL’s decision that Nike would replace Reebok as the league’s exclusive maker of on-field apparel and fan gear. The terms of the five-year Nike deal weren’t disclosed, but Adidas has said the loss of the license agreement, which Reebok has held for the past decade, will result in an estimated $200 million to $250 million a year in lost revenue for Reebok.

Adidas also said problems at Reebok’s Indian unit would continue affecting results in the fourth quarter, without giving details. The company in May filed a criminal complaint against the former chief of its Indian operations and another former senior employee for alleged financial and commercial irregularities that resulted in the company taking a charge of $155 million plus a further $87 million in restructuring costs.

Several attempts to reinvent and reposition Reebok to take advantage of the U.S. market have failed to work. The latest plan is to market Reebok as a fitness-only brand. In September, Reebok marketing chief Matt O’Toole assured investors the brand’s new structure “will bring more focus and a deeper product offering and will provide better commercial opportunities as we turn the corner into 2013.”

But Reebok’s problems are deeply rooted and sales were down 6% excluding the loss of licenses and the problems in its Indian unit.

Adidas Chief Executive Herbert Hainer conceded the Reebok brand’s performance was “by no means satisfactory,” but pointed out the sales fall was an improvement from the second-quarter decline of 10%.

Mr. Hainer was more positive about the group’s prospects, predicting Adidas would increase sales, boost its profit margin and see earnings rise by a significant double-digit percentage in 2013.

This article was published by The Wall Street Journal on November 9, 2012.

Lufthansa Faces Cabin-Crew Strike – WSJ

Nicky Redl — Wed, 29 Aug 2012 01:50:00 +0000

FRANKFURT—Deutsche Lufthansa AG faces open-ended strikes by cabin crew in Germany this week after negotiations with the union representing onboard staff failed to settle a dispute over wages and the airline’s plan to hire temporary staff and outsource some positions.

The UFO labor union Tuesday said it is preparing for strikes that may start anytime from Wednesday and involve up to 19,400 crew members.

A Lufthansa spokesman said any industrial action would cost the airline millions of euros each day and the company is examining its legal options, without going into further detail.

Lufthansa last week vowed to press ahead with a sweeping cost-saving program, including the elimination of 3,500 administrative jobs, to improve long-term profitability due to high fuel prices and worsening economic prospects in Europe.

“It’s very important for Lufthansa to stick to its plans if it wants to stand up to low-cost and other competition, important enough that it has to hazard the consequences of strikes,” Commerzbank analyst Frank Skodzik said.

A 2009 file picture shows Lufthansa staff on strike at Frankfurt airport. The union representing Lufthansa cabin crew says its members plan to strike after talks on pay and conditions broke down. Associated Press

In April, UFO demanded a 5% wage increase for about 18,000 Lufthansa flight attendants, a profit-related bonus worth up to a month’s pay, and a guarantee that the airline wouldn’t outsource jobs or employ temporary cabin crew workers.

Like other European flag carriers, Lufthansa’s short-haul operations face increasing competition from leading discount carriers like Ryanair Holdings PLC and easyJet PLC. Air France, the French unit of Air France-KLM SA, and Iberia, the Spanish arm of International Consolidated Airlines Group, have said changing pay and conditions for staff on domestic routes to make them more competitive with budget airlines is vital to bring their short-haul operations back to profit. Like Lufthansa, Air France is considering the elimination of thousands of jobs.

In April, UFO demanded a 5% wage increase for about 18,000 Lufthansa flight attendants, a profit-related bonus worth up to a month’s pay and a guarantee that the airline wouldn’t outsource jobs or employ temporary cabin crew workers.

Lufthansa said Tuesday it offered a 3.5% wage increase and is willing to forgo hiring temporary workers for three years.

Lufthansa has faced industrial action this year. In February, about 1,700 flights were canceled in Frankfurt, Europe’s third-busiest airport, due to industrial action by the GdF union, which represents airport operator Fraport AG’s ground staff. Fraport said the cancellations cost it around €4 million ($4.9 million) and Lufthansa said the strikes cost the airline at least €10 million.

The airline also had to cancel about 50 flights in 2009 after cabin crew staged strikes for several hours in Berlin and Frankfurt. At the time, UFO said Lufthansa suffered damages of about €50 million.

This article was published by the Wall Street Journal on August 28, 2012

Humorist That Held Up a Mirror to Germany – WSJ

Nicky Redl — Thu, 26 Aug 2010 21:49:00 +0000

A yodelling diploma won’t solve the European debt crisis, but humor can go a long way to get people through bad times—at least that’s what German social media users seemed to feel this week.

Twitter and Facebook spheres have been buzzing with tributes for the country’s most beloved humorist Loriot, who died Monday aged 87, while his videos have been topping the most popular lists at online retailers.

Although Germans are often teased for not having a sense of humor, even the country’s Chancellor showed how she valued the experience of being cheered up.

“For a long time to come, his works will make young and old laugh—and enlighten them on the essence of being German,” Mrs. Merkel said in a condolence statement.

Loriot, born Bernhard Victor Christoph Carl von Buelow, gained huge popularity in the country with his high-brow satire on daily life, winning numerous awards throughout his career, including one of Germany’s highest decorations—the “Great Cross of Merit with Star” in 1998—and receiving lifetime achievement honors from the German Film Academy in 2009.

Born in Berlin in 1923, ‘Vicco’ von Buelow started drawing cartoons for the German magazine Stern in the 1950s.

In the 70s he took on the name Loriot, based on the French name for an animal in his aristocratic family’s coat of arms. Throughout his 60-year career he created numerous cartoons, sketches, songs, books and movies , and many of his characters’ phrases have that made their way into everyday German language.

On Wednesday, in an allusion that would be apparent to most Germans, daily newspaper Frankfurter Allgemeine Zeitung titled an article about problems in eastern Europe “Das Bild haengt schief,” or “The painting is hanging crooked,” the name of a famous Loriot sketch about a lonely battle to get a painting to hang straight.

Loriot pointed many of his humorous jabs at Germans, commenting in his work on typical bourgeois values, like efficiency and order, and the German sense of ‘Gemuetlichkeit’, which translates most closely as ‘comfort’ or ‘coziness.’

He also liked to turn the camera on gender relations, as portrayed in his movie Oedipussi. Loriot himself said that he was most interested in the miscommunication between people and the absurdity of many everyday situations. If he was little known outside Germany, it is the fault of the language barrier and not his comic timing.

In the decades when Americans and Britons, for example, laughed at comedy that pushed the envelope, like the rough and outrageous John Belushi and the sometimes surreal antics of Monty Python, Germans continued to enjoy the low key Loriot, with his banal, middle-class characters.

They inhabited mostly drab surroundings, with grey or brown wallpaper and Biedermeier furniture, having conversations that painstakingly attempt to be polite and formal, no matter how ridiculous the circumstance.

In one of his most well-known episodes, he sends up Germans’ love of certificates and diplomas, as well as their reputation for being too serious about everything, in “Yodeling School.”

What would a Loriot in his pomp make of Germany’s current woes, being leaned upon by the euro zone’s peripheral countries for aid? Loriot’s sketches were concentrated on Germans but perhaps if he was working now, he may have widened his world view to contain figures of fun from other countries and their own perceived ‘Gemuetlichkeit.’

Chancellor Angela Merkel put it: “We will miss Loriot’s unique ability to hold a mirror up to our faces with a sense of affection.”

This articles was published in the Wall Street Journal’s The Source section on August 26, 2011.