Jan 22, 2010

Why the Bavarian purity law?

There is a law in Germany that dates back from 1516 that restricts beer ingredients to hops, barley and water. Why did the Bavarians enact such a law? After all, isn’t it great to drink wheat beer, nut brown ale or raspberry lager? Is it for food safety reasons? Obviously not. Economists on Wikipedia list the reasons:
  • to prevent price competition with bakers for wheat and rye
  • to ensure the availability of sufficient amounts of affordable bread (to avoid what happened to Mexican tortillas when corn was used for ethanol)
  • to prevent competition from beers brewed elsewhere with a wider range of ingredients (when the law was extended to all Germany, it led to the extinction of many brewing traditions and local beer specialties, such as North German spiced beer and cherry beer, and led to the domination of the German beer market by pilseners).
It is today used as a marketing tool.  

1 comment:

Bishop said...

Very interesting! Despite this, the beer market in Germany remains relatively unconcentrated. Check out this JEP paper http://ideas.repec.org/a/aea/jecper/v20y2006i1p189-205.html