New Brewery Openings Plummet In The UK

The UK-based financial firm HY Hacker Young’s latest report on the craft beer market in England was sobering news… The report showed that, while the number of independent breweries operating in the UK has almost doubled within five years, the sector’s growth has slowed significantly.

2017 was a record-breaking year for the industry according to the Drinks Business “as 395 more breweries opened for business over the course of the year, taking the number in business over the 2,000 mark for the first time since the 1930s.”

But that growth came to a near stand-still in 2018, as the market has become more “difficult for new entrants” as large-scale companies have started to buy and invest in successful “craft” breweries.

Australian producer Lion is just one of the drinks giants that have been acquiring craft breweries in the UK.

Last month, Lion bought a 100% stake in Huddersfield’s Magic Rock for an undisclosed sum, having already acquired south London-based brewer Fourpure in 2018.

Last January London’s oldest Brewery, Fuller’s was acquired by Japanese giant Asahi and Carlsberg bought London Fields for a cool £1m in 2017.

Breweries are selling to major players like Carlsberg and Heineken to take advantage of their established distribution networks, their alliances with pub chains and retailers, which allows them to negotiate more shelf space or room on the bar.

And just as in the US, these acquisitions by majors are making it more difficult for newer breweries to compete.

In the report James Simmonds, Partner at UHY Hacker Young, explained that the sector isn’t necessarily shrinking, but as a result of this consolidation, sales growth is going to be harder to come by….

“Craft breweries need to ensure their business model is sustainable and profitable at an earlier stage and not just rely on the idea they’ll constantly be able to grow their way out of trouble.”

“With supermarkets offering limited shelf space and a slow rotation of brands, small craft brewers will need to innovate to break into the market.”

Simmonds added that companies like AB InBev or Lion “can no longer count on the traditional beer market to further expansion,” and instead are looking for “new, niche products with high growth potential to fuel their revenue and profits.”