Several beer pundits have been saying it for years, but now, following an unprecedented rise in the number of breweries in the UK, it looks as though their dire predictions about unsustainable growth have at last come to pass.
New figures from accountancy firm UHY Hacker Young, make sober reading, as they show that just eight new breweries opened in Britain in 2018-19, compared to the 390 that launched just a year earlier. This huge drop in the number of openings marks a five-year low and suggests that Britain’s "craft-beer boom" is running out of steam.
This massive fall was bound to happen, and for many the only surprise is that it didn’t happen a lot sooner. The accountancy firm suggests that the industry’s “gold rush” phase has come to an end, with greater competition making it harder for start-ups to break into an already crowded market. A major component in this fall has been the reaction of some of the larger established brewing firms, with several of them investing in, or taking over promising craft beer start-ups.
Many of us recall the howls of outrageous indignation from the "craft glitterati" over Heineken acquiring a major slice of both Beavertown and Brixton breweries, which followed on the heels of AB Inbev’s take-over Camden Town Brewery. Cask-ale devotees were equally appalled by the acquisition of Fuller’s brewing division, by Japanese mega-brewer, Asahi; especially as it included the purchase of the historic Griffin Brewery, in Chiswick.
Probably the most disconcerting aspect of this has been the perception that many well-known craft beers are brewed by small, independent companies. To back this up, recent research by the Society of Independent Brewers (SIBA), found many drinkers were unaware that many popular craft beer brands were produced by large companies.
SIBA’s survey of 2,000 people, found that 43% of drinkers thought craft beer could only be made by small brewers, blissfully unaware there are no restrictions on use of the term. When challenged over this, only 2% of respondents said beer made by multinationals merited the craft beer label.
A partner at UHY Hacker Young said: “We’re not saying that the market is shrinking, just the number of players is consolidating and sales growth is going to be harder to come by".
“Craft breweries need to ensure their business model is sustainable and profitable at an earlier stage and not just rely on the idea they’ll constantly be able to grow their way out of trouble.”
However, despite the dramatic decline in new start-ups, the number of British breweries remains high, with 2,274 last year compared to 1,352 just five years ago. The challenge remains to see how many of them are sustainable in an increasingly competitive market.
It is already becoming clear that starting your own brewery, is no longer an automatic way of making money (not that it ever was in my eyes). Don’t be surprised either to see more breweries starting to fall by the wayside, and not just those producing truly awful beer.
It is an unfortunate fact that some of those producing high quality beers are at equal risk of failing as those producing over-hopped and over-hyped murk, especially if their business acumen is not all it should be.
This whole shake-up process was always inevitable, given the number of players in the field, and it looks likely to continue for quite some time to come.