UK: Number of breweries going out of business triples in past year
The number of UK breweries going out of business has tripled in the past year, with smaller craft beer manufacturers most at risk as consumers opt for cheaper options during the cost of living crisis, according to research, The Guardian reported on June 5.
In total, 45 breweries entered insolvency in the 12 months ending 31 March, compared with 15 in the previous year, according to the most recent official Insolvency Service statistics analysed by Mazars, an audit, tax and advisory firm.
Mazars said more beer makers were likely to go bust as the competitive market and the squeeze on consumer spending continue to affect sales.
The insolvencies were largely of smaller craft breweries, which operated in an oversaturated market and faced overheads rising and drinkers choosing to buy cheaper beers, said Paul Maloney, an associate director at Mazars.
Craft breweries often offer more expensive, premium beers but rising inflation and the cost of living crisis have prompted consumers to select cheaper options such as supermarket own brands and those owned by large international breweries.
Meanwhile, the boom in craft brewing has meant there are too many brands competing for limited shelf space in supermarkets and bar space in pubs.
Maloney said: “Craft breweries have been struggling for some time but rising prices have brought their financial challenges to a head. Craft brewers often offer ‘premium’ beers, but consumers are turning to cheaper options. As such, discounted brands produced by large international brewers and supermarket own brands are increasingly the choice for consumers.
“The craft beer market became heavily overpopulated over the last decade. The cost of living crisis now means many of these brewers are fighting for a place in a shrinking market. Some of them will not make it.”
Small breweries also often suffer from limited routes to market, lacking proper distribution channels to consumers, and are reliant on taprooms and supplying to local bottle shops. Those restrictions have limited the turnover of many craft breweries, meaning that they were not able to break even.
Breweries that have entered administration in the past 12 months include Newcastle’s Tyne Bank Brewery, which was founded in 2011 and had contracts with Morrisons and the Co-op. It was bought out of administration, with the new owners focusing on using its premises for events.
London-based Boxcar Brewery called in administrators in March due to an “unworkable situation” with landlords and debt issues. It closed its taproom but its owners plan to sell beer again under the Boxcar name.
Wild Beer Co, a brewery based in Somerset with deals with Marks & Spencer and Waitrose, was bought out of administration in December, five years after raising £1.7m through crowdfunding in order to build a taproom.
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