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Small brewery closures triple as cost-of-living bites

Published 05/06/2023, 14:15
Updated 05/06/2023, 14:10
© Reuters.  Small brewery closures triple as cost-of-living bites

© Reuters. Small brewery closures triple as cost-of-living bites

Proactive Investors - Small breweries going bust tripled in the last year, according to industry research from accountancy firm Mazars.

Some 45 breweries closed in the twelve months to March 31 compared to 15 bankruptcies in the year prior, Mazars said.

The firm warned that more craft brewers could suffer a similar fate due to the increasing competition in the market and a reduction in consumer spending.

The Kernel Brewery, widely recognised as the pioneer of craft beer in the UK, confirmed that business still hadn't "bounced back" from the pandemic.

The brewer noted that its operations were being supported by the popularity of craft beer in London, particularly Bermondsey where the group is based.

A Kernel representative added that its taproom had been performing well, but there was a noticeable decrease in independent venues that would typically sell craft beers.

Craft beers, which often are marketed as premium drinks, have struggled with the cost-of-living crisis leading to customers switching to cheaper alternatives, Paul Maloney, an associated director at Mazars said.

He added: “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 brewers also struggle with developing a route to market, unlike large players like Heineken and Carlsberg (CSE:CARLa), they are forced to sell to taprooms and local bottle shops.

This limits both margins and growth potential and leads to difficulty in just breaking even.

Tyne Bank Brewery, a Newcastle-based group that sold to the Co-op and Morrisons, was one of these brewers to fall into administration during the last year.

It was then acquired back in November with new owners planning to use the brand and venue for events.

A couple of months before this, London-based craft brewer Beavertown was acquired by Heineken when it bought the remaining 51% of the company.

When it owned 49%, the Dutch brewer was able to use its muscle in the industry to boost Beavertown's sales from £12.7mln in 2018 to £35mln in 2020.

Read more on Proactive Investors UK

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