New data suggests that the craft beer boom in the UK has slowed sharply in the last year as global drinks giants muscle in on the sector.
Research by accountancy group UHY Hacker Young found that the total number of breweries increased by just eight last year versus the 390 added in prior twelve months.
The total number of UK breweries reached to 2,274 at the end of 2018, up from 1,352 five years ago.
UHY Hacker Young highlighted that the craft beer market has become difficult for new entrants after multinational brewers tapped into the high growth rates by buying and investing in some of the successful craft breweries. The huge levels of investment that the multinationals then deploy through their craft subsidiaries are said to have thrown up barriers of entry against other entrants.
For example, the multinational-backed businesses benefit from economies of scale, established distribution networks and the ability to negotiate with retailers and pub chains for shelf space. As a result, it makes it much harder for new entrants to compete.
James Simmonds, Head of Drinks at UHY Hacker Young, commented: “We’re not saying that the market is shrinking just the number of players is consolidating and sales growth is going to be harder to come buy.”
He added: “Craft breweries need to ensure their business model is s sustainable and profitable at an earlier stage and not just rely on the idea they’ll constantly be able to grow their way out of trouble.
“Multinational breweries can no longer count on the traditional beer market to further expansion. Large corporations will continue to look for new, niche products with high growth potential to fuel their revenue and profits.
“With supermarkets offering limited shelf space and a slow rotation of brands, small craft brewers will need to innovate to break into the market.”
