Forty-three breweries went bust in past year
National accountancy group UHY Hacker Young has reported 43 breweries went bust in the year to 28 February, many of them small independents, including Fourpure, Magic Rock and Burton Town.
UHY Hacker Young partner Brian Johnson said mounting cost pressures and an overcrowded market were among the reasons leading up to the insolvencies.
“The craft beer boom was one of the most exciting recent trends in food and drink. Unfortunately, it is a sector that attracted too many entrepreneurs who struggled to break even,” said Johnson.
“The recent closures suggest the UK’s craft beer market cannot continue to support all the independent producers that have sprung up in the last 15 years.”
“Weak consumer spending means many breweries will have to adapt to leaner times.”
Johnson added that many small brewers are now “caught in a perfect storm of production costs soaring while household spending remains tight”.
Recent increases in the national minimum wage and employer national insurance contributions have pushed up costs, while margins have been further squeezed by inflation across ingredients, brewing equipment and energy bills.
Johnson explained that producers who are often reliant on local bars and direct sales are particularly vulnerable if their customer base cuts back on spending. There is a concern that many consumers will trade down to cheaper beer brand as they tighten household budgets. This trend is making it harder for craft brewers to justify their typically higher price point.
Johnson said: “For smaller brewers that rely on loyal local followings, even a slight dip in demand can tip them over the edge. With so many brewers competing for attention, it’s increasingly hard to survive.”
He added that many small brewers are struggling to scale up, saying only the bigger craft breweries can access supermarket shelves or national pub chains, meaning many breweries cannot achieve the economies of scale needed to break even.
Keywords:
- Craft beer
- Inflation
- closures
- brewing
- costs
- UHY Hacker Young
- 43 breweries went bust
- mounting cost pressures
- overcrowded market
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