Friday, September 16, 2011

Unicredit on the Economics of Oktoberfest

Should their employer (Creditanstalt 2.0)* fail, these guys may be out of a job.
Let's hope someone, somewhere considers this a résumé buffer-upper.
From C-A Unicredit Economics and FI/FX Research:
Oktoberfest 2011:
A somewhat different safe haven
It’s that time of year again. This Saturday, at the stroke of 12 noon, the mayor of Munich will ceremoniously tap the first keg of beer and declare "O'zapft is" ("It is tapped"). The world’s largest fair will then open its doors to the public. The Oktoberfest traces its roots back to the festivities held to celebrate the marriage of Bavaria’s Crown Prince Ludwig to Princess Therese of Saxe-Hildburghausen on 12 October 1810. Since then, the Oktoberfest has been held every year on the Theresienwiese (or Wiesn for short), named in honor of the Crown Princess – except for 24 times, when it was canceled due to epidemics and the two world wars. This year, the event is being repeated for the 178th time.

Last year, the Oktoberfest bicentennial marked a new record for beer consumption (see chart). The temporary slump in beer sales during the financial market crisis and the subsequent deep recession was therefore quickly reversed. However, the figures for the bicentennial were biased somewhat by special factors. First, the Oktoberfest was extended by one day, i.e. 17 days instead of the usual 16. Second, capacities were expanded: There were two new traditional beer tents. As a result, the number of available seats increased from roughly 105,000 by over 8,000. But even adjusted for these effects, the recovery was substantial. Hence, the capacities were well utilized. On the final weekend, access to the entire Wiesn site had to be shut off for several hours due to overcrowding.

Despite the still smoldering EMU debt crisis, the real economy in Germany as well as in Bavaria was still relatively unscathed up until mid-year 2011. However, transmission risks remain high, as reflected in extremely nervous financial markets. And the strong slowdown of the global economy has meanwhile also considerably clouded the growth prospects in Germany. Hence, does this mean that business at the Oktoberfest will weaken again already this year? To better assess this, we take a look at the structure of the Wiesn economy....MORE (7 page PDF)
*No really! Unicredit owns Creditanstalt!