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QUICK THOUGHT: Do We Need to Worry More?

Brewery flags on a wall in Burton-upon-Trent.

There’s been the odd brewery closure in the last year, most of which we’ve taken note of without regarding them as HARBINGERS OF DOOM. But maybe we’re being complacent.

Breweries come, and breweries go, but the overall number continues to climb. Now that we live in a country with 1,800 breweries it’s hilarious to read articles from the early 1980s in which people fret about how crowded the microbrewery market was becoming with something like 35 in operation UK-wide.

If a brewery closes every now and then, even if it’s a tragedy for those involved, it’s part of the healthy operation of the market.

But what if you do that thing that people hate and categorise breweries: is the ‘craft’ end of the market (def 2.) in more trouble than the brewing sector as a whole?

We ask because this Tweet from Craig Heap grabbed our attention:

We’d missed the news about Otley. If you’d asked us to name Welsh craft breweries without reference to other sources we’d probably have mentioned the three in that Tweet plus Tiny Rebel (still going strong), which makes this seem rather concerning.

If we could somehow come up with a list of the UK’s Most Definitely Craft Breweries, how many would there be? And what would the attrition rate look like compared to breweries overall? We’ve a sudden creeping feeling that, with closures at one end and takeovers at the other, it might be noticeably worse.

Or maybe we’re just not paying attention to all the old-school microbreweries that are also folding, quietly, in market towns and villages where the neon don’t shine?

38 replies on “QUICK THOUGHT: Do We Need to Worry More?”

How many micro-breweries make it for more than a decade or so anyway? If the number of breweries keeps rising, then presumably the number of failures will increase correspondingly. Start worrying if you only hear of closures and no new blood appearing to replace those.

In many cases microbreweries fold because of a change in the owner’s circumstances rather than being inherently unviable.

But many people have been predicting a shakeout for some time, and inevitably it will include some of the good guys as well as the ones who won’t be missed.

Incidentally, Quantum Brewery in Stockport has recently closed because owner Jay Krause concluded that he’d be better working full-time as a brewer with Cloudwater rather than spending much of his time acting as delivery driver and debt collector, which is an entirely understandable point of view.

Rather than closures and take-overs by huge macros, wouldn’t it be better if some struggling smaller regional craft brewers merged operations, consolidated their offerings, and cut costs that way?

There are really two models of breweries – large regional breweries with an estate of tied houses (or bars), nation-wide distribution, their own bottling and canning plants, and supermarket contracts; vs small local cask brewers who are a small operation with a small handful of pubs (at most) who deliver the beer in the back of a van. Its trying to jump from one model to the other that is difficult and dangerous.

With a good few smaller outfits relying on PBD for margin what would happen if it were altered?

In the ‘craft’ market surely saturation point has been reached, or passed. How many more breweries with skulls on tins will the market support? As ‘craft beer’ is really a marketing idea rather than a real thing, its very reliant on hype and faddishness. The problem is that those customers are buying a feeling, an idea that they are part of something. But like all fads, what seems hip/awesome/ace one year is stale, passe and your dad’s old pants the next.

” As ‘craft beer’ is really a marketing idea rather than a real thing, its very reliant on hype and faddishness”

Nonsense. Craft beer = the proliferation of beer styles not previously widely available in the UK but now proving extremely popular with punters, like IPAs, porters, saisons, etc etc.

Its got absolutely piss all to do with marketing, hype or hipsters. If it was, it would never have penetrated the mainstream pub market to the remarkable extent that it has.

‘Craft Beer’ is hugely market , rather than product driven , and to suggest that certain types of beer such as IPA and Porter amongst others weren’t available before the hipster craft movement arrived shows a great economy of thought .
Brewers have been using both craft and art for centuries to keep us imbibers reasonably happy ! .

More abject nonsense, I’m afraid.

I can go in any of 20 pubs within 200 yards and in each one I will definitely find an IPA, probably a porter, and maybe a saison. 20 years ago in those same pubs, I would have found zero IPAs, zero porters and zero saisons. Go and look at the shelves in tescos, or the bar and fridges in wetherspoons and compare to what you would have seen in 1996. The number of UK breweries has gone up by a factor of 10. Its a whole new world.

How is it that things can change so incredibly profoundly in a relatively short space of time, and yet there are still people out there in denial claiming that nothing has changed and its all just a marketing fad. You’re like King Cnut, except you’re about 100 foot under water.

If you think that is a marketing innovation rather than a product innovation, you need to go back to school and start again from scratch.

maybe 500 yards if you want to be pedantic.
Most cities have 20+ pubs within a reasonably small central area.

Before this conversation gets any shirtier, can you tone it down a notch, please? Don’t want it to stop – interesting points all round.

Py is right. Most ‘craft’ brewers have a little or no marketing spend (aside from branding and design). It’s about the product. While there is a faddishness amid the true geeks (who really are not hipsters in any sense of the word), we have reached a point where beers that were once a niche-within-a-niche are now reasonably well established and available. There is indeed antipathy toward most (but not all, e.g. Fullers) of the output of the trad regionals among enthusiasts of newer independent breweries – I’d suggest this is because so much of the regionals’ beer is pretty dull and mediocre (often terrible on cask).

PS many of the best modern U.K. brewers use fairly restrained bottle or can design. Beavertown and Magic Rock are more exception than rule. Many (Buxton, Hawkshead, Torrside) use artwork which could quite comfortably adorn a cask pumpclip – unsurprisingly so, given that many ‘craft’ brewers make excellent cask beers. An abundance of skulls etc may actually indicate ersatz craft (especially if the ‘c’ word is used on the can or the bottle).

Putting the craft beer label to one side for a moment, the problem a lot of the lower volume/turnover brewers face is that the bigger guys have now muscled in on their act. Looking at PBD scales is interesting, as most of the competitive activity takes place roughly within the bands of PBD production levels, ie. (micros v micros, regional/family v regional family etc.) with the vast majority of newer breweries being down the lower volume end of the scale, all competing for the same occasional (low margin) guest slot at the bar, or the same (lower margin) space on the supermarket shelf. It is much easier for a regional/family brewer to install a 10-20 BBL plant to produce interesting well made small batch brews, than it is for a micro to scale up to produce a consistent 4.0% ABV Session bitter with a permanent route to market. At the micros level of production, and outside of urban centres, it would make much more sense to try to tap into a regional/family brewers distribution and pub network than go it alone, the glamour volumes of national pub groups and supermarkets won’t provide enough margin to sustain their businesses.

I’m actually a bit surprised that we haven’t (that I’m aware of) seen either a strategic partnership or a “strategic partnership” between a respectable-but-not-big-time craft micro and a traditional family-to-regional scale brewer who want to fill the “crafty” slot in their more upwardly-mobile tied houses with something halfway credible.

Unfortunately, quite a lot of the craft sector completely disdain the traditional breweries. It would take a bit of courage for a new brewer to link up with one of them and I imagine they would be fearful of losing shelf/bar space where they currently sell. Plus presumably the regional would dictate what they needed for their bars, which would be anathema to craft micro brewers. I realise I may be wrong, the recent Cloudwater/Lees collab was unexpected.

I think that people exaggerate massively how ideologically driven a lot of craft beer people are. They might not have much time for their local family brewer’s beer (and even that’s a generalization), but I don’t think that that would necessarily be a reason to turn down a high volume distribution deal.

And as far as shelf/bar space goes, I get the impression that there’s not much of that to go around at the moment. So Magic Rock or Cloudwater might be better off sticking to a “proper craft” market, but other brewers might feel that they’ve got less to lose…

I find it quite cute that a decade after Thornbridge launched Jaipur, with Sixpoint Double IPA in Wetherspoons, Brewdog in Tesco, and Goose Island and Lagunitas all over the ruddy place, people are still talking like “craft beer” is some sort of hipster micro fad that could blow over at any moment…

If you look at things like “Century of British Brewers” it’s clear that back in the day when there were also a large number of quite small brewers there was quite a lot of “churn” in the industry. Nature of the beast I think.

Quite happy to leave the worrying to you two while the rest of us get on and enjoy the beer.

It would be a useful if say, a reputable industry trade body accurately charted brewery openings against big brewery consolidation and closures. I think if someone did we’d see that as a whole the industry is still growing, but perhaps its starting to slow a little. Growth is still growth, though.

Closures are of course inevitable. I once read that only 16% of UK startups survive for longer than two years, a trend that brewing seems to be bucking. So that’s one slightly more positive way to view things.

Also thinking about how the industry is run, up until very recently start ups would generally be run by older people, maybe using a redundancy package to finance themselves. Now we have 20-somethings who are financed by crowdfunding. So they are often single (ie nobody to cover financially except themselves) and probably don’t have huge mortgages to worry about. So able to devote more time to the brewery with less outgoings to worry about. Although if they aren’t making enough once they do start to want to settle down, them they may hit problems. Wonder what the average age of a brewery owner is now compared to 2005?

Sam Smiths have been doing porter for quite a while, as well as oatmeal stout , anyone remember Ralph Harwood’s porter (cask) Guinness Park Royal did?, and before anyone else decides to elevate my rank and suggest further study aims ; it’s a personal view coupled with a healthy dose of cynicism , gained from observation of industry habits and trends over the past 20 years .
Anyone for a Hooper’s Hooch ??

Edd – there is a distinction to be made between the odd example here and there (we’ve got a bit on the revival of porter in our book – Penrhos and Tim Taylor first, c.1977) and wide availability, which is what I think Py is talking about. We can reliably buy a draught porter in Penzance now – not something I would imagine has been the case since about (guess) 1930!

I saw something about American brewery churn a few months ago and I was astonished at the turnover of breweries. I can’t find it at the moment but iirc something like a third of breweries didn’t last three years. Mayfly breweries.

I did find this though. Oregon is not the UK but at the end of 2014 it had 216 breweries for a population of considerably less than Scotland. Many comings but also numerous goings. So the fact that some breweries are closing – well, just happens.

A couple of questions. Is there anywhere else like Drygate, the Williams Bros/Tennant’s tie up? Have any breweries co-invested in larger facilities eg three or four 10-barrel micros building a 60-barrel plant for joint use; or any one brewery “gone big” with the express intent of nesting cuckoos?

There is so much interesting stuff going on in the UK brewing industry – so many new beers, so many new beer styles, so many new brewers, so many new pubs and bars, and complete reinventions of existing pubs and bars.

The market trying to establish itself with each brewer and bar-owner trying out different strategies to find its niche, its image and its price point, there are so many interesting ideas to discuss, that its a shame we have to keep going over the same worn-out arguments over whether this sudden interest in beer is just a passing fad and whether it’ll ever really catch on in mainstream pubs. (Hint, it isn’t, and it already has).

I’d love to see someone who actually knows what they’re talking about do a proper data visualisation of the UK beer and pub industry in 2016.

The beer market has completely changed. Back in the 1970’s, the overwhelming majority of pubs were owned by breweries. Most of the others also had some of tie. At a time when 75% of beer was drunk in pubs. There were very few possible outlets for a new brewery back then. That’s why the market might appear crowded with a few dozen micros.

Sudden interest in beer? Been going on all of my adult life.

For you, yes. But you have to admit that the idea of beer as something you drink to savour the flavour has increased dramatically over the past 10-20 years.

No, you’re wrong there. The number of people it applies to may have increased, but if you don’t get the idea that flavour was why CAMRA was formed then you miss out completely.

That’s what sudden increase in interest means. Suddenly, more people are interested. How many beer sommeliers were there in 1970? How many pubs had hard bound beer menus with tasting notes? How many restaurants gave food and beer pairings? How many specialist beer shops were there with beers from all over the world?

We agree. There were beer geeks, but they didn’t have outlets for it or have networks, infrastructure (festivals, etc.). Py is also right to say that the visibility in mainstream culture is really only from, say, 1973, and the current wave is another thing again.

Coming late to this. But something here resonated so commenting anyway…

We’ve had one local brewery close recently. A good quality operation, but doing a bulk of beer that isn’t what a crafty drinker would call “craft”… more trad cask. Which is a market I’d not touch with a barge pole at the moment were I crazy enough to want to open a new brewery.

In essence two key problems I reckon:

1) building market with that style of beer right now is really hard, the number of “trad” cask lines out and about free-of-tie is almost certainly dropping (the “explosion” of micropubs does not mitigate against the closures) and the number of breweries is increasing drastically (and based on the calls I get a majority of these are doing more trad ales). The Cask Report has lauded growth of cask in the last few reports, but the growth has been marginal whilst the growth in breweries doing trad cask has been large. And and unhighlighted fact the data shows in the latest cask report shows an actual decline in cask volumes. Still they laud cask “outperforming” macro keg… which is sort of like “hurrah, our market is dying less fast!”.

2) you can’t get any margin on this product because big brewers whacking out bitter cheap destroys the profitability, small new brewers have nothing but PBD to give them an edge and all of their PBD advantage goes to giving that edge in a race-to-the-bottom price-war. It only take a handful of years of that to burn out many start-up brewers. A majority of the limited number of free-of-tie pubs will buy on price. And fact is there is some perfectly OK beer being offered below £60 a firkin by little breweries barely breaking even. And publicans, also squeezed increasingly by declining sales and rising costs, are more and more conservative and risk-averse.

Whist there are exceptions… they are rarities. There are pubs doing well out of buying what I’d consider to be “better” beer, and small/new breweries managing to sell decent beer at good prices because they’ve managed to build themselves a reputation that adds some trust in their brand.

There are not enough of these to make a viable market for everyone brewing good beer that needs better margins.

I can quickly think of about 6 breweries I know that have at the very least said they’ve pondered winding up in the last year, and a couple who’ve come really very close indeed. And that’s breweries who do at least have a foot in the door of the wider market (only 2 of them are ones I personally deal with.)

As we enter 2017 we’re just going to see more breweries… less pubs… lower cask volumes*… and what seems to be shaping up as significantly higher costs. There will be price increases. This will impact market and volumes, especially outside of well off cityfolk lands, and will close more pubs and breweries.

Sorry to be all doom and gloom… I might be wrong of course!

And it’s certainly not going to be the end of good beer. It’s just not going to be an even harder time to be a mid(-or-below)-level brewery or pub. Some have nailed it, they’ve built their reputation – they’re probably sustainable. Some fresh and new will ride the year or so of “new brewery” honeymoon where all the tickers want you… if you’re not outstanding that demand will die. Many in the middle who’re past that honeymoon period or who haven’t nailed the needed volume or reputation may well be gone by the end of 2017. (I am not predicting a massive brewery die-back… but who knows, does anyone in any industry think the next few years are likely to be buoyant? Foreclosure specialists might be rubbing their hands in glee I suppose.)

People used to dream of running a pub on retirement, which inevitably meant floundering around for a few years offering a mediocre product and generally wasting their entire life savings.

Nowadays, people seem to run microbreweries instead, with the same result.

The occasional brewery, often more through luck than judgement, gains enough momentum to reach critical mass and breaks through into the realms of reliable profitability, but most won’t.

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