Sobering figures: UK craft beer expansion ‘slowest since 2014’

The number of new UK craft brewery openings has fallen to its slowest rate of growth since 2014, suggesting the sector has found its ceiling, according to new figures from accountancy group UHY Hacker Young.

There were just eight more breweries recorded in 2018 – much fewer than the 395 recorded in 2017, UHY Hacker Young said.

The craft beer market has become difficult for new entrants as multinational brewers continue to buy and invest in the most successful breweries. The huge levels of investment that have been thrown into the category has created barriers to entry for smaller players.

Some of the largest brewers in the world – notably Anheuser-Busch, Kirin and Heineken – have been investing in the craft segment, attracted by its higher rates of growth and the potential for premium pricing. These larger companies also boast economies of scale, established distribution networks and the ability to negotiate with retailers and pub chains for shelf space, giving them significant competitive advantage over more traditional ‘craft’ operators.

As a result, it makes it much harder for new entrants to compete, UHY Hacker Young said.

James Simmonds, head of drinks at UHY Hacker Young, elaborated: “We’re not saying that the market is shrinking, just the number of players is consolidating and 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.

“Multinational breweries can no longer count on the traditional beer market to further expansion. Large corporations will continue to look for new, niche products with high growth potential to fuel their revenue and profits.

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

The number of new breweries in the UK – Europe’s second largest craft market – rose consistently between 2013 and 2016 before jumping in 2017. The latest increase, of just eight breweries between 2017 and 2018, represents a marked slowdown on the familiar level of growth.