Brewery opens every 3 days in thirsty Britain

Mark Willingham Uncategorized

Brewery opens every 3 days in thirsty Britain

 

Entrepreneurs seek to capitalise on trend for craft beers

 

Source: FT

by: Scheherazade Daneshkhu, Consumer Industries Editor

October 3, 2016

 

A new brewery opened every three days in the UK last year as entrepreneurs sought to capitalise on the thirst for craft beers with outlandish names such as Northern Monk Lust and Mad Hatter Wee Buns.

 

The 134 new breweries took the UK total to 1,692 last year, up 8 per cent on 2014, driven by microbreweries producing craft beer, according to UHY Hacker Young, the accountancy group.

 

“Craft beer is leading the way in the surging popularity of artisan products and has pushed aside other brands in high street bars,” said James Simmonds, partner at the firm.

 

“This increasing popularity has transformed many microbreweries into highly profitable businesses for entrepreneurs looking for a niche position in the food and drinks market.”

 

Artisanal food and drink are increasingly regarded as luxury items and consumers are willing to pay higher prices for them, according to UHY Hacker Young, making them attractive to entrepreneurs.

 

Demand for locally produced or interesting new beers, which typically have stronger flavours than mass-produced mainstream beers, has been the main reason for the 65 per cent rise in breweries in the last five years, from 1,026 in 2010.

 

The trend has been repeated in the US, where the number of breweries has more than doubled over the past five years, and in the EU – where they have risen by more than 75 per cent.

 

However, some signs of a slowdown in growth exist. Last year’s 8 per cent increase in openings was the lowest in five years. In the US too, craft beer sales have been slowing.

 

Successful microbreweries have been in demand from large, established producers keen to increase their presence in the industry’s main area of growth.

 

Last year, Anheuser-Busch InBev, the Belgian brewer of Stella Artois and Budweiser, bought the Camden Town Brewery just five years after it opened.

 

Similarly, SABMiller bought London’s Meantime Brewery last year, before itself being taken over by AB InBev in a £79bn deal due to complete next week, when Meantime will be sold on to Japan’s Asahi.

 

UHY Hacker Young said the investment from larger brewers gave microbreweries potential access to funds for international expansion or to produce a more extended portfolio of beers.

 

The accounting group also said the weakness of the pound since June’s referendum vote to leave the EU was likely to benefit craft brewers more than the mainstream brewers.

 

“These products are made locally and unlikely to be affected by any increase in import charges. International breweries, however, may have to increase their prices to compensate for the extra costs that they may face,” it said.

 

Though craft beer has injected momentum into an otherwise sluggish sector, beer has continued to lose out in popularity to other types of drink, especially wine.

 

Spending per head on alcohol in the UK increased 41 per cent between 2000-2015. The amount spent on beer rose just 4.1 per cent compared with 68 per cent on wine and cider, according to the British Beer and Pub Association, the industry group.