British craft beer goes on booming

There are now more 2,000 breweries in the UK for the first time since the 1930s says UHY Hacker Young, the national accountancy group. 

UHY Hacker Young adds that the number of breweries in the UK has jumped 18% in just one year from 1,692 in 2015 to 1,994 at the end of 2016. The number has risen by 64% over the last five years, from 1,218 in 2012 (see graph below). 

The UK has been going through a craft beer revolution with sales of higher margin artisan style beers soaring both in pubs and in supermarkets. The success of the pioneering craft breweries has attracted more entrepreneurs, some of whom honed their skills with homebrew kits, to raise money and open their own micro-breweries. 

UHY Hacker Young says that micro-breweries have also benefited from a tax break, introduced in 2002, allowing breweries producing less than 5,000 hectolitres, to pay 50% less beer duty than their larger counterparts. 

Some examples of new craft breweries opened last year include:

• Bellfield Brewery, launched March 2016 in Edinburgh – the UK’s first dedicated gluten-free craft brewery, made in small batches using traditional methods
• Toast Ale, launched January 2016 in London – makes craft ales from leftover bread, as part of a campaign to reduce food waste
• Verdant, launched January 2016 in Falmouth – started as homebrew when a group of friends wanted more hoppy, ‘hazy’ beers than those available in Cornwall 

UHY Hacker Young explains that a number of high profile M&A deals in the sector continues to attract investors into the sector to help fund microbreweries. 

In addition, other private equity funds are increasingly looking to capitalise on the growing success of breweries. For example, L Catterton, a PE fund backed by LVMH, recently invested in the Scottish craft brewer Innis & Gunn. 

UHY Hacker Young says that, as more craft brewers are acquired by the majors, decisions will have to be made whether the small craft brewers production site is closed. 

James Simmonds, Partner at UHY Hacker Young, says: “The craft beer boom has reversed around 70 years of consolidation in the brewing industry. There is plenty of growth still to come. However, the majors are beginning to make a fightback by acquiring craft brewers and launching their own artisan style brands like Hop House 13 Lager [produced by Diageo/Guinness].” 

“The craft brewers can’t afford to rest on their laurels they will need to work hard to get their product into that limited shelf space and bar space.” 

Number of breweries in the UK has increased 18% in just one year