UK: Brewery closures jump 82% in 2023

The proportion of UK breweries which entered insolvency in 2023 grew by 82% in 2023, rising from 38 in 2022 to 69 by the end of December, according to audit firm Mazars.

Using figures from the Insolvency Service, the company discovered that a large number of the beleaguered breweries were smaller craft brands hit by the rising costs of production, duty and inflation.

Included in the figures are some of the breweries picked up by private capital firm Breal Group, which has rebranded as Keystone Brewing. These include Black Sheep Brewery, Brew By Numbers, Brick Brewery and Purity Brewing.

Most recently, Keystone has undertaken a number of redundancies at Black Sheep, which, according to the private equity firm, were needed to be made due to the “enormous challenges” faced by the sector, noting that “efficiency measures are essential”. This was timed with the group pushing a major rebrand for the Yorkshire brewery involving new labelling and packaging along with marketing and PR in the refresh sent to press.

The one bright spark in the craft brewing landscape was the saving of legendary Leeds company North Brewing, which was acquired by Kirkstall Brewery, after North had originally stated that administrators were due to be appointed.

The expense of leasing brewing equipment, inflationary pressures on raw materials and the cost of production, as well as electricity prices and employee wage costs has created a perfect storm of issues that are putting smaller brewers out of business.

In addition, consumers are moving away from purchasing more expensive craft brews as the impact of alcohol duty rises on higher ABV products and the cost of living crisis has hit pockets hard.

The auditing firm also commented that the craft beer segment had become “increasingly crowded” in the past decade as the boom on smaller breweries exploded across the UK, and the number now competing for a diminishing number of consumers has squeezed the market.

Craft breweries have struggled to reach out beyond localised markets and supply to the local on-trade, which has restricted its profitability, Mazars claimed.

Paul Maloney, Associate Director at Mazars said: “Despite the popularity of craft beer and ‘hipster’ independent breweries, the cost-of-living crisis is continuing to take its toll on brewers. With a lot of consumers tightening their belts, cutting costs by buying a mass-market brand lager instead of a craft beer is a relatively easy thing to do.”

“For smaller brewers – as opposed to mass market manufacturers – regular local customers make up a lot of their sales. If those sales drop off, they can face financial difficulties very quickly.”

Aside from the Mazar figures, the previous level of brewery closures appears higher than suggested by insolvency figures.

According to Steve Dunkley, head brewer at Beer Nouveau who has been keeping a comprehensive list of brewery closures, more than 80 breweries went bust in the UK in 2022, significantly more than reported by Mazars.

Dunkley told db: “The problem with a lot of lists is that they pick a singular source of information, such as Companies House, or insolvency applications. A lot of breweries aren’t registered with Companies House for instance. A lot don’t go through administration or insolvency. This list pulls from multiple places including direct from brewery’s social media posts.”

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