LONDON – The UK craft beer scene is facing a brewing crisis, with brewery closures soaring by 82% in 2023, according to a new report by auditing firm Mazars.
The report echoes similar trends in the US, highlighting the mounting pressure on small brewers due to a perfect storm of economic factors.
“Independent breweries have seen raw material, utility, and energy costs rise across the board,” said Ned Walker, Head of Communications for the Society of Independent Brewers (SIBA).
“Without the economies of scale of larger companies, many have found it incredibly difficult to remain profitable.”
Mazars attributes the closure spike to a combination of rising production costs, increased taxes (known as “duty” in the UK), and inflation. The cost of raw materials, brewing equipment, and electricity has skyrocketed, while rising wages further strain brewery budgets.
Consumer spending has also been impacted by the cost-of-living crisis, leading to a decline in demand for craft beer. The UK’s tax system, which levies higher taxes on beers with higher alcohol content, further exacerbates the issue, as craft beers often have a higher ABV than mass-market brands.
“Despite the popularity of craft beer, the cost-of-living crisis is continuing to take its toll on brewers,” said Paul Maloney, Associate Director at Mazars. “For smaller brewers, regular local customers make up a significant portion of their sales. If those sales drop off, they can face financial difficulties very quickly.”
The report also notes the increasingly competitive nature of the UK craft beer market, mirroring the situation in the US.
The steep rise in brewery closures highlights the challenges faced by independent brewers in the UK. While the craft beer scene remains popular, the economic headwinds are making it increasingly difficult for smaller brewers to survive.
