Craft beer boom: 500 craft breweries open in a year in the UK

Pic:iStock

The number of new breweries opening in the UK has leapt up 55% in the last year, as the craft beer business continues to build its position as an increasingly important part of the drinks industry, according to UHY Hacker Young.   

A total of 520 opened in the UK in the last year – the equivalent of 10 per week. UHY Hacker Young, a UK accountancy network, says it is now easier for entrepreneurs to get funding, while incentives like Small Brewers’ Relief (which gives a reduced rate of alcohol duty to brewers that produce less than 60,000 hectoliters per year) provide a ‘helping hand’ to new market entrants.

However, the popularity of craft beer has not yet reached that of the US: the American craft beer industry enjoys a 21% market share (by value) with sales of $22bn (£18bn). In the UK, craft beer accounts for 8% to 9% of total beer sold in licensed premises.

Craft beer millionaires

Multinational brewers have been concerned by slow growth from their mainstream brands, while their premium brands have failed to achieve the same price points as independent breweries.

Consequently they been willing to pay high prices for independent brands - providing these brands have proved that they can deliver high sales growth and premium pricing.

“High exit valuations have added to the number of craft beer millionaires being created by the sector’s boom,” said James Simmonds, partner, UHY Hacker Young.

Craft beer in the US

The UK figures mirror US trends: with 2015 data from US craft beer body, the Brewers Association, reporting a 20% rise in the number of microbreweries (totaling 2,397) & a 26% rise in regional craft brewers (totaling 178) while the overall number of breweries grew 15% (totaling 4,269 breweries).

In the US craft brewers take a 12% market share by volume and 21% share by value.

The Brewers’ Association provides a definition for a ‘craft brewer’ (including an annual production of 6m barrels of beer or under; and less than 25% of the brewery owned by a non-craft brewer). No such definition exists in the UK. 

High profile takeovers in the craft beer arena have proved to both entrepreneurs and backers that craft beer is a serious business: “a long way from the cottage industry of a decade ago,” says Simmonds. Consequently, it has become easier for entrepreneurs to get the necessary funding to start their business or expand existing operations.

In May 2015, London craft brewer Meantime was acquired by SABMiller (the craft beer brand was subsequently bought by Asahi last year) while AB InBev acquired Camden Town Brewery in December 2015. Figures for the transactions were not disclosed at the time but UHY Hacker Young puts the acquisition of Meantime at around £120m ($146m at today’s exchange rate) and Camden Town at around £85m ($103m).

The premium price point of craft beer has held firm despite ‘supermarket wars’ to cut prices across other F&B products.

“Craft beer has proved it is no flash in a pan,” said Simmonds. “Both pubs and supermarkets realize they will lose sales if they do not make way for some ‘craft’ brands.”

“The pricing discipline of cult beer brands has held steady so far – they have been largely untouched by the supermarket wars that have savaged margins elsewhere in the F&B sector.”

UHY Hacker Young adds that the Small Brewers’ Relief reduced rate of alcohol duty should be extended to higher volume start-ups as well.

Related News

Where are the top craft brewers? The Brewers Association reveals the top 50

The top 50 breweries and craft breweries in the US

Pic:iStock/Sergey_Peterman

Top 10 craft beer producing countries: US and UK lead the way

The petainerKEG line. Picture: Petainer.

Petainer sees demand for PET packaging from Spain & Portugal craft brewers

The industry has not got the duty cuts it wanted. Pic: iStock/chrisbrignell

Spirit, wine & beer industries dismayed by duty rise in UK Budget

Pic:iStock/KuzmikA

Tesco expands craft beer section

Loch Sunart, on the west coast of Scotland. Pic:iStock/PHoyle

Crafting a new market: Scotland highlights opportunities for craft beer & tourism

Betsy Beer

Cathay Pacific introduces craft beer best drunk at 35,000ft

Pic: iStock

Boston Beer Company highlights ‘softening of craft beer category’

What are the top trends in US craft beer? Pic:iStock/tab1962

‘A big year for small beer’: 10 trend highlights for US craft beer in 2016