Party's sadly over for many smaller breweries...

Brewery numbers in the UK have doubled over the past decade, which comes on top of a similar growth rate experienced in the previous 10 years. This equates to a net addition of almost 1,500 new breweries between 2001 and 2021, taking the total to 1,902, according to The Good Beer Guide.

This has been great for beer drinkers as the choice available has improved remarkably during this 20-year timeframe, and especially so in the past decade as this period encompasses the craft beer revolution during which the variety of beer styles has increased exponentially.

But things are starting to look a little rocky in the brewery world as we come out the other side of covid-19 and the government-backed loans, furloughs and other life-support tools run their course. As the dust settles, the tough underlying trading environment is becoming all too clear.

Even before the pandemic, many smaller players were being kept alive by crowdfunding. It still amazes me that the industry continues to attract funding from such a source when the only profitable exit has been Camden Town Brewery (sold to AB-InBev), and we have to go back to December 2015 for that successful deal. By contrast, there have been numerous failures.

A rare profitable exit: Camden Town Brewery

In recent months, the number of breweries tripping up and hoisting up the For Sale sign sets a very worrying tone for the industry. Itchen Brewery closed its doors at the start of the year, West Berkshire Brewery hit the buffers owing £10m to creditors (disclosure: I was a shareholder), Swan Brewery of Herefordshire has called time and Weird Beard Brew Co of West London has put itself up for sale. 

More worrying for the industry is the abandoning of the craft beer sector by the large brewing companies who had provided funding for growth, and an ability for the founders of successful craft businesses to cash in some chips. Kirin-owned Lion recently announced it is looking for buyers for its Fourpure Brewing Co in London’s Bermondsey and Huddersfield-based Magic Rock Brewing, that it acquired in 2018 and 2019 respectively. Meanwhile, Carlsberg Marston’s Brewing Company (CMBC) recently released a statement proposing the closure of London Fields Brewery, which it acquired in 2017, and its aim of finding buyers for the site and brand. 

Clearly covid-19 has had a serious impact on these businesses, but the reality for both Lion and CMBC is that supporting these brands, regardless of a pandemic, has cost them significant amounts of money in marketing and promotional expenses to build their presences in the on-trade and retail market with the major supermarkets. They have clearly had enough and made the decision to jettison these cost centres and instead focus on their other core brands and overseas markets.

The writing is on the wall: London Fields Brewery

These acquisitions were undertaken when the craft beer sector was white-hot, and it was no doubt tempting for large players to pick off some cool brands to add to their portfolios (Magic Rock certainly had the necessary credibility, in my view). But maybe more note sh

ould have been taken of the US, where the craft brewery cycle was well ahead of that in the UK (Lion owns some US brands, so maybe it should really have known better).

Over in the States, it had been largely recognised that buying craft breweries is not without risk. Yes, it brings you a strong, cool brand – but as referenced, this needs financial support. And no, it does not bring you the opportunity to drive economies of scale. Closing down these craft breweries and transferring production to the parent’s existing facilities is arguably the death knell for the respect/value inherent in these brands. This quashed the potential purchase of many of the first-generation US craft breweries.

Against this backdrop, I’d expect to see a lot more pain in the coming months for some of the smaller players in the craft brewing sector, where the battle to sell their beers into pubs and onto the shelves of the supermarkets is more competitive than ever, and the potential to ultimately sell out to a big operator and sail off into the sunset now looks a very distant hope indeed.

Glynn Davis, Editor, Beer Insider