- Assistance for the sector is needed post coronavirus
- Brewers should make use of CBILs to build up online platforms to increase sales capacity
The number of breweries in the UK has stalled for the second year in a row (dropping by one over the last year to 2,273), as growth in the craft beer sector slows after a period of explosive growth, says UHY Hacker Young, the national accountancy group.
UHY Hacker Young says that the boom in craft beer has reversed the trend in closures that has been in place since the First World War when the number of breweries sunk from 3,556 in 1915 to 885 in 1939**. In 2012, there were 1,218 breweries – see graph.
UHY Hacker Young says the two main reasons for this stall in growth are increased competition from multinational brewers, and a trend away from drinking beer amongst the younger generations.
The aggressive growth strategies deployed by multinational drinks companies in recent years in order to capture some of the growing craft beer market has made it more difficult for new entrepreneurs and brewers to enter the market. Multinationals have increased their market share by launching their own craft beer varieties, alongside acquiring many of the emerging independent craft breweries.
UHY Hacker Young says the craft beer market may also be reaching saturation point amongst its existing core customer market, which means growth is slowing. Whilst craft breweries have been very successful at attracting 25-50s year-olds to craft beer the newest generation of drinkers have not yet bought into craft beer in the same way.
UHY Hacker Young says that both government and local authority support is now needed to help the brewery sector through the coronavirus crisis. This should include an expansion of the Small Brewer Relief and a more sympathetic approach from local authorities in collecting licensing fees.
Breweries should also look to make use of the government’s CBIL scheme in order to help fund the adaptation of their sales channels to match changing demand. The lockdown means Breweries need to expand their capacity to sell online, along with selling greater quantities of craft beer to local off-licenses.
Looking ahead to after coronavirus, UHY Hacker Young says for the craft beer market to maintain its growth, it will have to adapt to the challenges set by the “nolo” alcohol trend and “drinkstagramming” trend.
Tapping into the “nolo” alcohol market can require substantial capital investment and research & development spend. However, if independent breweries can afford this then there is potential for the craft beer market to grow further.
James Simmonds, Partner at UHY Hacker Young, says: “Stalling growth in the number of UK breweries is not the whole story – with the UK remaining one of the world leaders in craft beer.”
“In order to help the sector bounce back as quickly as possible from coronavirus, the government should consider expanding the Small Brewer Relief to include a wider group of breweries. An increase in the level of business rate relief for brewers and pubs would also be welcome.”
“Brewers should make use of this support available to them to scale up their online platforms, in order to increase their online sales directly to customers.”
“Consumer habits are likely to change even after the lockdown has ended, and brewers need to be able to capitalise on where consumers are now looking to buy their goods.”
“Innovative new strategies and products may also be required for brewers to tap into the “nolo” alcohol trend currently popular with younger generations.”
Number of Breweries in the UK each year since 2012 – shows rapid growth
** English Heritage
About UHY Hacker Young
The UHY Hacker Young Group is one of the UK’s Top 20 accountancy networks with more than 90 partners and more than 500 professional staff working from 22 locations around the country. The offices within the Group provide a wide range of accounting, tax and business advisory services, with a reputation for integrity and reliability within the financial community, and particularly with London’s Stock Markets. UHY Hacker Young are also ranked 14th in the ARL Corporate Advisers Rankings Guide amongst other UK audit firms for advising London Stock Exchange listed companies.
UHY Hacker Young is a founder member of the UHY International network with offices in every major financial centre in the world. Further information can be found at www.uhy-uk.com
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