The craft beer industry which has been on fire in the United Kingdom is signaling that it might be slowing somewhat…
According to HMRC, shorthand for Her Majesty’s Revenue and Customs department, the number of new craft brewery openings is slowing…
In spite of recent data from national accountancy group UHY Hacker Young which showed craft beer increasing its market share in pubs and supermarkets, a total of 430 new breweries opened in the United Kingdom in 2017, down from a record 520 the previous year.
And while 420 new craft breweries opening in a single year is hardly insignificant, it does suggest a number of factors may be in play, including Brexit worries, as well as independent brewers “hit by rising ingredients costs caused by a slump in the pound” according to the Drinks Business.
Another challenge for brewery startups in the United Kingdom is finding the necessary funding.
In spite of the many craft beer success stories in Great Britain, UHY notes that the country’s leading banks remain “reluctant to lend to craft breweries as most do not fit their risk profile.”
And it’s not like crowd-funding strategies by breweries such as BrewDog, now valued at £1.7 billion ($2.2 billion) after its latest crowdfunding effort, is problem-free.
According to UHY issuing too many shares to fund company expansion, rather than debt, “could see the stake of the original founders diluted away.”
Most recently, Leeds-based brewery Northern Monk raised £1.5m from 2,161 investors, and East London brewery Five Points raised more than £950,000 from 1,350 investors.
And even though some industry watchers have warned that the onset of Brexit might slow craft beer’s overall momentum, UHY Hacker Young says that in spite of the slowing number of craft brewery openings in the UK, “the market is still some way from peaking.”
“The craft beer industry continues to fizz with hundreds of entrepreneurs looking to tap into high consumer demand,” said James Simmonds, partner at UHY Hacker Young.