Just as in the US, small brewery closures are escalating in the United Kingdom, and the reasons why aren’t all that dissimilar either.

Here’s the deal…

The proportion of UK breweries which entered insolvency (that’s Brit for bankruptcy) in 2023 grew by 82% in 2023 according to the audit firm Mazars

And just as in the US, cost pressures are exacting a terrible toll on small berries in the United Kingdom.

The Society of Independent Brewers (SIBA, kind of like the Brewers Association in the US, but with a British accent) Head of Communications, Ned Walker told the Drinks Business that the escalation of UK brewery closures were the result of a perfect storm of post-pandemic factors…

“Independent breweries have seen raw material, utility and energy costs rise across the board and without the economies of scale of the global companies many businesses have found it incredibly difficult to remain profitable, for many breweries the combined financial burden has proved too much and we have seen a number of closures over the last twelve months.”

And that was Walker’s take on the closures in 2022, things have only gotten worse.

Using numbers from the UK Insolvency Service, Mazars found  that brewery closures in 2023 were the end result of rising production costs, duty (that’s Brit speak for taxes in the UK) and inflation which was much less a factor in 2022.

The cost of making beer rose on several fronts in 2023. Thanks to inflation and the war in Ukraine raw material prices are so much higher, as is the cost of leasing brewing equipment and the electricity that powers it. Also employee wages are necessarily rising

Consumers  besieged by the rising cost of living are finding the price of craft beer much  less affordable especially in light of higher taxation in the UK which is based on the amount of alcohol in the beer. The higher the ABV (alcohol by volume), the higher the tax rate. And craft beers tend to  have a much higher alcohol content than mass market beers in the UK, leading to higher taxes on the beers and higher prices for the consumer.

The auditing firm also noted that the craft beer segment had become “increasingly crowded” in the UK as it is also is in the US.

“Despite the popularity of craft beer and ‘hipster’ independent breweries, the cost-of-living crisis is continuing to take its toll on brewers,” Paul Maloney, Associate Director at Mazars told the Drinks Business.

. 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,” Maloney added. If those sales drop off, they can face financial difficulties very quickly.”