A heavy pinch of salt is required for further reading but over the last few months there has been an increase in the number of small independent breweries closing around the UK. It has not become particularly news worthy as small businesses fail all the time but it seems that, in the UK, the craft beer trend is coming to an end, but it doesn’t seem to be entirely consumers making that the case.
I was recently at my favourite pub in London, the no nonsense, unpretentious Southampton Arms in Gospel Oak. They only serve beer and cider from independent British breweries, with limited supplies of everything, so the line-up changes pretty much every time I am there. The quintessential hipster beer aficionado is very much welcome, but all the beers often only have 2 words as their description, it’s not a place to wax lyrical about orange zest hazy pales or the merits of different hops and yeast usage. That being said, there is occasionally a strange concoction on tap, and I would like to make it very clear that I am quite a boring beer drinker by modern standards. I like refreshing lagers and easy stouts – IPAs, often, don’t do it for me, although there are plenty I have tried and liked I never choose one as my first round. Anyway, on tap at the Southampton Arms was a ‘Vanilla Cola Sour’, which sounded promising and refreshing, perfect for the sun. I was wrong. It was a lot. A lot of too much of the weirdest things. The bartender said that a few people had ordered it, but only as half’s because, she reiterated ‘it is a lot to handle’.
Craft beer is an art-form, and breweries in Britain had gotten really good at it but like all art there is a limit to creativity. There are only so many ways you can make beer that people will want to drink. The brewery industry in the UK, especially in London, Manchester and Bristol is facing real challenges and has done over the last 18 months. First the pandemic decimated independent, small scale, breweries, reliant on foot traffic clientele. Second the cost-of-living crisis has put huge amount of strain on running small scale operations, and lastly, I just don’t think there is the demand anymore.
How the cost of living crisis is affecting breweries
In 2023 already 33 breweries have had to close, with 5 more at serious risk and many more who have had to scale back production or restructure their business to stay afloat. With the running cost of bars and breweries almost tripling during the cost-of-living crisis as well as the fact that consumers have less money to spend, breweries face real challenges to turn a profit. The accountancy firm Mazars reported that the number of breweries going insolvent had tripled compared over the last year, when compared to the previous year. The removal of the government utility cap and relief funds, that kept some breweries afloat during the pandemic had been a death blow.
Depressingly, this, like all financial turmoil, is only affecting the small independent breweries. The craft beer industry in the UK is still a £1.4 billion industry, as of 2022, and has seen steady growth of 3.2% per year from 2017 – 2022, even with pandemic disruptions, and 2022 saw a growth of 9.3%. The iconic Camden Town Brewery was bought 7 years ago for £85 millions and is now a part of the AB InBev conglomerate, which controls over 500 brands, including Budweiser, Corona, Becks and Stella Artois and remains the largest beer company in the world. In the UK they have a 17.7% market share, as well as 40.4% market share in the US. They can hoover up any beer brand they like, making it harder and harder for small independent companies to get near competing, just up the road from the Southampton Arms, Marx would be shaking in his grave.
The case of Brewdog
The other dominant brewery in London is Brewdog, which still remains independent and continually expands it business. Their revenue, in 2022, was £286 million with a profit margin of 53% – the report boasts of plans to expand production further and open more spaces around the world, including Las Vegas. Even without joining a larger conglomerate Brewdog has still slipped into the big business mentality, losing sight of the romanticism often found in being an independent brewery. Controversy surrounded the company after a BBC film revealed a toxic culture where employees felt objectified and worked in fear which cost Brewdog its B Corp certification, given to companies which exemplify high standards of social and environmental consciousness as well as accountability transparency. Yet Brewdog still continues to grow, they must have great beer.
Changes in consumer trends
Another issue highlighted by the Mazar report was simply over-saturation in the industry. While Brewdog and Camden Town can dominate across supermarket shelves and commercial pubs – small independent breweries, buoyed by the huge trend of craft beer popularity, fight for the attention of beer enthusiasts and local pub lovers. And here my contention is that people are losing interest. Of course, beer fanatics exist and, second only to tea, beer remains an essential component to British fluid intake but the demand for new funky craft beer is, in my opinion, waning. This can be seen with the emergence of alternative drink companies, which must be responding to the change in trends. There is a burgeoning scene of craft wine made in London, with 4 small scale wineries dotted around the city, not to mention the growth in alcohol free beer and other non-alcohol drinks made by small scale producers. The obvious example of this is the ever-growing popularity of Kombucha and craft made Cola but also includes flavoured lemonade and ginger beer.
The government should protect small businesses
The other obvious factor is that small artisan enterprises cannot compete with bigger firms in lobbying as well, which stops them getting any kind of government protection. There is very little support for artisans already and the governments attitudes towards is already showing its ugly side as they remove it from curriculums, it doesn’t bode well for artisans in any field. But the lack of support for British produced beverages is quite tragic and impacts everyone – most European countries protect their national producers especially on ‘essentials’ like wine and beer. It is often why so many Brits love weekends away in mainland cities – cheap booze. The recent discouragement by the Dutch government of English revellers travelling to Amsterdam potentially shows the cost on other countries when the only legal drug is so expensive at home.
Whatever the factor that is at play, craft beer is on the verge of following the course of almost every trend (notable gin a few years ago) – became incredibly popular, but big names slowly emerge to control the majority of the industry and smaller operators have fallen away or compete for slithers of market share. The financial turmoil, and lack of support, has made this trail off much harder and made the differences between businesses far greater and even where the machine cannot eat up a company like Brewdog, it has buckled slightly under its own size. If the UK was able to produce cheap beer domestically, without the insane alcohol taxes we have now, I can only see that as a positive. Please drink responsibly.
Second year International Development
