The number of craft breweries going bust has soared as rising production costs and reduced consumer spending take their toll.
The figure jumped more than threefold in 2022 as rising production costs and reduced consumer spending took their toll, according to data obtained by accountants Price Bailey.
According to data obtained from the Insolvency Service under the Freedom of Information Act, a record 38 breweries went bust in 2022, up from nine in 2021, making 2022 the highest yearly total on record.
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Price Bailey said that independent brewers are being squeezed by a convergence of factors, including rising material, labour and energy costs combined with falling sales as consumers switch to cheaper, multinational brands.
Craft breweries produce beer in small batches and so are less able to benefit from economies of scale of larger brewers, leaving them disproportionately exposed to demand and supply-side headwinds in the economy.
Fallen Brewing, based in Stirling, The Wild Beer Co in Somerset, and Manchester-based Beatnikz Republic are some of the independent brewers that closed in 2022.
Matt Howard, head of insolvency & recovery at Price Bailey, said: “The growth in brewery startups has slowed in recent years and we are now starting to see a significant number of business failures as the market becomes increasingly saturated and brewers face stronger economic headwinds.
“Soaring inflation is leaving consumers with less money to spend on premium products. This is reflected in the shelf space retailers allocate for craft beers. As consumers trade down to cheaper global brands, supermarkets reduce space for craft beers which leaves some products with very little market exposure.”
He added: “While many multinational brewers have seen profits surge over the past year, smaller independent brewers generally operate on much tighter margins with minimal exposure to foreign markets. They produce smaller batches of beer and cannot leverage economies of scale to offset inflationary pressures.”
Price Bailey pointed out that trading conditions for small brewers are likely to remain challenging as “prices for many of the core ingredients used in brewing remain stubbornly high”, adding: “The Russian invasion of Ukraine and the summer heatwave in Europe has exacerbated shortages of grains, including wheat and barley, causing prices to spike.”
John Muir Trust buys 45-acre Highlands site
One of Scotland's leading conservation charities has announced the purchase of a 45-acre site in the Highlands with a view to creating a major community and visitor hub.
The John Muir Trust said the acquisition of the site, on the shoreline of Loch a’ Chàirn Bhàin, signals its ambition to work with local communities and crofters to boost the fragile economy of the area, increase the resident population and strengthen the bond between people, landscape and nature in this beautiful part of the Highlands.
Rare toy robot sells for £8,400 at auction in Glasgow
A rare toy robot that lay in a loft for decades and was destined for a charity shop has been sold for £8,400 at auction.
The Radicon robot featured in the McTear’s Antiques & Interiors auction in Glasgow on April 7 and was expected to fetch up to £10,000.
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