The British beer industry is facing a perfect storm of challenges, from the rising cost of raw materials, to soaring energy bills, Brexit, and much more besides, writes Matthew Curtis.
Saturday 07 May 2022
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When I started researching this piece, I thought I understood how challenging things are for the beer industry. After speaking to a few brewery owners, bar workers, and those involved with assorted industry bodies, I must confess I wasn’t prepared for how bleak the outlook would actually be.
The contents of this article shouldn’t be a cause for panic. It does not mean that the wealth of wonderful beer available from our favourite pubs and bottle shops is suddenly going to evaporate. But you should be concerned; aware of how this might affect you as someone who enjoys great beer and how in turn you can support the small, independent businesses that make British beer culture so vital.
Unfortunately, like most things we pay for, what our beer costs is going to increase, and there is little we can do to mitigate this. It does not mean that your favourite breweries are trying to profiteer during a time of economic downturn—quite the opposite—like the rest of us, they are merely trying to survive by keeping beer in their tanks, and their staff gainfully employed.
Part of me wanted to sugar coat this, and tell you it’s not going to be so bad, but I’m afraid that would be dishonest. Breweries and bars you love are going to downsize, or close down, and there is very little we can do to stop this rot.
Little, however, is still better than nothing.
In 2013 I was lucky enough to visit Portland, Oregon, in the north-western United States. This is a beer city like few others, chock full of variety, home to some of the best beers you can drink, and some of the best pubs and taprooms to drink them in. One of my highlights (in fact one of my most cherished beer experiences ever) was visiting a brewery called Hair of the Dog, on Yamhill Street, close to the banks of the Willamette River.
After tasting through a wide range of various barrel-aged delights, including styles I had not previously heard of like Adambier – a strong, dark, hoppy style not unlike an English barleywine, with origins in Dortmund, Germany – I left the taproom with a warm glow inside me that has remained ever since. On February 14th, 2022, this warmth finally left me, when Hair of the Dog founder Alan Spinks, who had run the brewery since 1993, posted a video on Facebook announcing that he would be closing down, permanently.
“Beer has been very, very good to me,” he said in the two minute long clip. “I feel so fortunate to have been able to spend over half my life doing something I love so much.” For fans of his brewery, this was not a happy Valentine’s day.
What does an American brewery closing down have to do with struggles in the British beer industry, you might ask? Good question. The US is home to more than 9000 breweries, way more than our 2000 here in the UK. But it’s not just got more breweries. It’s home to an altogether slicker, more entrepreneurial beer culture. You could say opening a successful craft brewery is an example of the American Dream, and if you look at leading lights from the past 30 years such as Stone, Oskar Blues, Sierra Nevada and Bell’s, you could add that many have achieved this.
There is a cardboard shortage. There is a carbon dioxide shortage. The cost of gas, electricity and water is skyrocketing... did I mention the price of your pint was going to go up?
But due to the size of the US beer industry, I’ve learned that what is happening there is an early indicator of what will happen to the global beer community. In previous writing for Ferment I’ve talked about the supply chain, and due to its size the US is often at the start of this, in particular for products such as hops, and aluminium cans, to name a couple of examples.
Both are increasing in price, in fact cans are becoming harder to easily obtain, with some suppliers tripling their minimum order quantity, hitting small breweries hardest. There is a cardboard shortage. There is a carbon dioxide shortage. The cost of gas, electricity and water is skyrocketing. Between climate change in the West and war in the East, global barley stocks are severely reduced—not a problem for British brewers as we grow enough for ourselves—but it means farmers and suppliers can significantly increase prices, due to market demand. Did I mention the price of your pint was going to go up? This is the tip of the iceberg as to why.
There are plenty of other examples of industry struggles from across the pond that are forcing beloved operations like Hair of the Dog to close. Another is Modern Times in San Diego – once among the fastest growing breweries in America – which has been impacted hard, having to close four of its eight sites along the West Coast, due to what it describes as “global declines in the craft beer industry”. This particular incident cost 73 people their jobs, and this trend is, sadly, one that will soon come ashore in the UK.
In 2018 I wrote a piece called From the Brim to the Dregs, which looked at examples of industry hardship during a time of relative boom. In it I spoke to Jay Krause, a brewer now employed by Manchester’s Cloudwater, but previously the owner of his own brewery, Quantum, in nearby Stockport, which closed down in 2016.
“When you start a company with zero cash to spare, there’s often zero cash in reserve should anything go awry,” Krause told me at the time. “Living month to month without any kind of buffer really ground me down mentally, and once the enjoyment started to disappear, I knew it was time to call it a day.”
While there’s never an easy time to be operating a small brewery, which typically exists on slim margins and is highly reliant on regular cash flow via sales to local pubs and bottle shops, the circumstances created since Quantum closed have meant it is arguably now more difficult to run a small brewery than at any time in modern history. I say “created” because the first of these, Brexit, is our own fault. Import tariffs and lengthening supply chains have increased the cost of brewing supplies, making it far more difficult and expensive for British breweries to export beer.
But the other reasons are far more sinister: a global pandemic, a cost of living crisis… a war.
The impact of this has now begun to rear its unpleasant head. On the 1 March 2022, Wood’s Brewery of Wistanstow, Shropshire, closed its doors for good due to what it described in a final press release as “unfavourable trading conditions”. Established in 1980, the brewery was immensely popular locally thanks to ales such as Shropshire Lad. It was also a founding member of SIBA, the Society for Independent Brewers, which represents the interests of over 700 small British breweries.
Another brewery to have already been impacted by these circumstances is The Cheshire Brewhouse. The business was set up in 2017, in the town of Congleton, Cheshire, by owner/brewer Shane Swindells; an ebullient character with opinions as bold as the beers he brews. But these beers – like the incredible Govinda IPA, and the unctuous Gibraltar Porter – shall never again pass our lips once he cans his final batch, rumoured to be making an appearance in spring 2022.
“I’ve been inventive. I’ve tried to pivot my business in lots of different ways,” he tells me. “I don’t think there’s much future for breweries my size.”
Swindells says his frustrations extend far beyond the supply chain and utility woes I’ve already mentioned. He blames the actions of multinational breweries for “stitching the market up” as well as pointing towards new duty and business rates that have made it too challenging for the small businesses that would be his customers. With The Cheshire Brewhouse focusing on premium products, made with the best ingredients – such as heritage Chevalier malt, which he uses in the beers I mentioned – his customers have instead turned to cheaper options, in order to keep their prices down.
But the multinationals aren’t faring particularly well either. Australian giant Lion, which purchased Fourpure and Magic Rock in 2018 and 2019 respectively, has recently announced it is putting these breweries back up for sale due to what it calls “difficult trading conditions over the past two years”. In another worrying move, Heineken recently announced that it would be putting up its prices. And when the second largest beer business in the world announces something like this, you know times really are tough.
Swindells also blames organisations like SIBA for not adapting to changes in the market fast enough, or providing the resources he feels breweries such as The Cheshire Brewhouse need to survive. Speaking to the association’s executive director, James Calder, I get the sense he and his team are putting in an immense amount of effort for its members, but he remains honest about the size and impact of the difficulties the industry is facing.
I’ve been inventive. I’ve tried to pivot my business in lots of different ways... [but] I don’t think there’s much future for breweries my size.”
“People are going to have to cut back on things, and independent beer is going to be one of them,” Calder says. “I think we should be worried about breweries dropping out of the bottom [of the market].”
In search of a shred of optimism, I reached out to Luci Clayton-Jones, co-owner and managing director of Double-Barrelled Brewery in Reading. I’ve been delighted by this brewery’s ascendancy since Luci established it with her husband Mike in late 2015. Since then it’s gone on to grow around an industry-leading taproom, and produce fantastic beers including delectable fruited sours like The Big Fruit Heist, and snappy, resinous IPAs such as Back to Life. But, just as with every brewery I spoke with, her comments quickly brought me down to Earth with a bump.
“The nature of the last two years means we have little to no cash reserves,” she tells me. “We’re still a young business; so while we are growing rapidly, we have no past profit and we can’t afford to take the hits as well as some of the more established breweries out there.”
However, digging a little deeper into her feelings I do get the sense that there is still some optimism out there. Clayton-Jones remarks that SIBA has been doing a “great job” campaigning for issues specific to smaller breweries, for example. Among the admission that the challenges facing breweries are great, the most positive thing to come out of this conversation was that Double-Barrelled – and other breweries like them – are up for it. They want to keep making and selling great beer, and putting smiles on thirsty customers’ faces. Only recently, the brewery has begun contract brewing for nearby Elusive Brewery in Finchampstead, another brewery defiant in the face of adversity, and in desperate need of extra capacity that Double-Barrelled has been able to provide.
“We have a great local and beer community around us and they have continued to surprise us with their support throughout the pandemic,” Clayton-Jones says. “Let’s just hope we can keep that up.”
I take back what I said earlier. There isn’t very little we can do to turn back this formidable tide. There is a lot. When we’re able, we can head down to our local pub, or taproom, or bottle shop, and we can acquire ourselves some delicious beers. We can talk to our friends and get them excited about it too. It’s important that we admit how hard it is out there and sit with these challenges, just as it is important to dust ourselves off and face them, head on.
“This industry is remarkably resilient, it’s got a bright future but it’s going to be a rocky couple of years,” SIBAs James Calder says. “If you’ve got the choice, if you’ve got the disposable income, support independent breweries where you can.”
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