Craft breweries battered by soaring operational costs
Soaring operational costs and a greater competition between brands have battered the UK’s brewery industry with the number of beer factories going under tripling over the past year.
The number of breweries which have become insolvent has risen from 15 to 45 over the last year, new figures out from audit, tax and advisory firm Mazars reveal, with the company blaming rising overheads and an over-saturated market for the rise.
“Craft breweries have been struggling for some time but rising prices have brought their financial challenges to a head,” Paul Maloney, associate director at Mazars, said.
Over the past decade, the craft beer industry has become more competitive – with brewers no longer exclusively selling their beverages at stalls and websites but instead trying to land lucrative deals with supermarkets such as Tesco and Sainsbury’s.
The business has been lucrative for some, with Camden Town Brewery, acquired by booze giant Anheuser-Busch InBev for around £85m in 2015, after its Camden Hells beer proved to be a favourite with drinkers.
“The boom in craft brewery start-ups meant that there were too many breweries competing for limited shelf space in supermarkets and bar space within pubs,” Maloney explained.
Craft brewers are now on the same page as the UK’s pub sector which is also battling hikes in energy and operational costs due to the tough economic climate.
Maloney added: “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.”