27.08.2024
Study
Increase in the number of bankruptcies of British breweries amid demand for cheaper craft beer
45 breweries, mostly small producers, have gone bust in the last 12 months, compared to 15 in the previous year.
According to the study, the number of UK breweries that have gone out of business has tripled over the past year, with smaller craft beer producers at greatest risk as consumers opt for cheaper options during the cost of living crisis.
According to the latest official data from the Insolvency Service, analyzed by Mazars, the audit, tax and advisory firm, 45 breweries went bankrupt in the 12 months ended March 31, up from 15 the previous year.
Mazars said that more beer producers are likely to go bankrupt as a competitive market and reduced consumer spending continue to weigh on sales.
According to Paul Maloney, deputy director of Mazars, the bankruptcies were mostly small craft breweries operating in an oversaturated market and facing rising overhead costs, while consumers were opting for cheaper beers.
Craft breweries often offer more expensive premium beers, but rising inflation and the cost-of-living crisis are driving consumers to choose cheaper options, such as supermarket own brands and those of large international breweries.
Meanwhile, the craft brewing boom has resulted in too many brands competing for a limited number of supermarket shelves and pub bars.
Maloney said: “Craft breweries have been struggling for some time, but rising prices have caused their financial problems to become more acute. Craft brewers often offer ‘premium’ beers, but consumers are turning to cheaper options. Therefore, consumers are increasingly choosing discounted beer produced by large international breweries and supermarket brands.
“Over the past decade, the craft beer market has become very crowded. The cost-of-living crisis now means that many of these brewers are struggling to find a place in a shrinking market. Some of them will not survive.”
Smaller breweries also often suffer from limited routes to market, lack of proper distribution channels for consumers, and depend on craft beer and supplies to local bottled beer stores. These constraints have limited the turnover of many craft breweries, meaning that they have not been able to break even.
Among the breweries that have been placed into administration in the last 12 months is Newcastle-based Tyne Bank Brewery, which was founded in 2011 and had contracts with Morrisons and Co-op. It was bought out of administration, and the new owners focused on using its premises for events.
London-based Boxcar Brewery called in administrators in March due to a “non-working situation” with landlords and debt problems. The brewery closed its bottling facility, but its owners plan to sell beer under the Boxcar name again.
Wild Beer Co, a Somerset-based brewery that works with Marks & Spencer and Waitrose, was bought out by administration in December, five years after raising £1.7 million through crowdfunding to build a brewery.