Artisan brewers are feeling the brunt of the cost of living crisis, as drinkers opt for mass-produced, cheaper brands rather than premium craft tipples.
Figures show the number of breweries going bust has tripled in the past year as drinkers count the pennies and turn away from pricey premium ales in a bid to save money. Figures by accountants Mazars show that there were 45 insolvencies in the year to the end of March, up from 15 the year before, as craft brewers are hit by hit by rising costs and tough competition.
The famous Black Sheep Brewery, in Masham, North Yorkshire, called in the administrators earlier this year after it made a £1.6m loss in 2022/23 as it struggled with the fallout from the pandemic and rising costs and in Newcastle, the Tyne Bank Brewery ran into difficulties following Covid restrictions that crippled the hospitality industry in 2021. Both breweries were rescued from closure by new owners.
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Paul Maloney, associate director at Mazars, told This Is Money: "Craft brewers often offer 'premium' beers, but consumers are turning to cheaper options. Discounted brands produced by large international brewers and supermarket own brands are increasingly the choice for consumers. The cost of living crisis now means many of these [craft] brewers are fighting for a place in a shrinking market. Some of them will not make it."
The North East has a thriving craft brewery scene, with Craft Beer Newcastle, an organisation celebrating the local brewries, listing well in excess of 40 businesses from Bear Claw Brewery in Berwick down to Camerons Brewery in Hartlepool, with many others in between.
But Anna Scantlebury, of Cullercoats Brewery, in North Tyneside, said most brewers are feeling the pinch as they reeled straight from Covid lockdown restrictions into the cost of living crisis.
"Sales are down and costs are up," said Anna, who runs the business with her husband Bill. "There's just the two of us here so we are lucky because we have no staff to worry about but we just accept that we are not going to earn as much these days."
The couple set up the company 12 years ago after Bill decided to follow his dream and turn his 30-year home brewing hobby into a business. During the pandemic, he used the time to study for a diploma in brewing, and when Covid restrictions were lifted, the couple were raring to go.
However, with the cost of malt rising by 43% since 2021 and bottles soaring from 29p to 36p, Anna says there's no doubt they are feeling the squeeze. "Everything's going up and we can't pass it all on to our customers," she said. "We supply around 60 pubs in total, but business is down there too and we are finding where they maybe had five handpulls, they now only have two or three. Our online sales really saved the day during the pandemic but they are down too now as people look to save money.
"But we are not doom -laden. We survived the pandemic and I think that has given us the resilience to get through and hope we are one of the craft brewers that float."
It's a similar story at the Full Circle Brew Co, based in Hoult's Yard in Ouseburn, where founder Ben Cleary says online sales, pubs and bottle shops have all seen a drop-off in business over the past year.
Full Circle canned its first batch of beers on the day the Covid restrictions came into force, so Ben is no stranger to difficult market forces, but he says the cost of living crisis has driven a huge hole through his sales. "Our beers are at the top end of the market, and you can see why £3-7 for a can becomes unsustainable when people can pick beer up for much less in the supermarket," he said.
"However, because we are a newish business, we are finding that we are creating savings by buying in bigger quantities as we grow and becoming more efficient at brewing the beer. That gives us cost savings which offset rising prices to a certain extent. When we started, we were paying £500 for a tonne of grain, and we are now paying £8-900 for a tonne. Luckily, we locked in out energy prices so we don't have to worry about that in the near future, as brewing takes a tremendous amount of energy. We're doing OK though. But there's no doubt that it is a tough time and every day poses a new problem."
Paul Maloney of Mazers said: “Craft breweries have been struggling for some time but rising prices have brought their financial challenges to a head. Craft brewers often offer ‘premium’ beers, but consumers are turning to cheaper options. As such, discounted brands produced by large international brewers and supermarket own brands are increasingly the choice for consumers.”
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