Brewing insolvencies up 82 per cent in 2023 amid hospitality woes

Research has revealed that the UK brewing sector saw a more than 80 per cent increase in insolvencies during 2023, as the market continues to be heavily impacted by specific headwinds, in addition to the wider pressures facing the UK hospitality industry.

According to research from audit, tax and advisory firm Mazars, the number of UK breweries rose 82 per cent last year. 38 breweries went insolvent during 2022, a figure that jumped to 69 in the year to December 31 2023.

Mazars stated that much of this insolvency activity occurred among smaller craft breweries, who are not only facing the challenges hitting the wider sector (including rising costs for power and wages), but also suffering from operating in a market that has become highly oversaturated.

The craft beer boom of the 2010s saw both a proliferation of small independent craft breweries, as well as larger breweries and supermarkets seeking to capitalise on the trend by offering their own craft beers, often priced far lower than their smaller counterparts.

More recently, the market has been hit by the cost-of-living crisis, which has seen consumers cut costs at the expense of craft brewers, who typically price their products at the higher end of the market in comparison to mass-produced offerings.

Mazars say that this has left many craft brewers struggling for a place in a shrinking market and that many have had their profitability restricted by an inability to expand beyond their local area. With local consumers and businesses facing mounting challenges, even these vital local markets are fragile.

Mazars Associate Director Paul Maloney commented: “Despite the popularity of craft beer and ‘hipster’ independent breweries, the cost-of-living crisis is continuing to take its toll on brewers. With a lot of consumers tightening their belts, cutting costs by buying a mass-market brand lager instead of a craft beer is a relatively easy thing to do.”

He added: “For smaller brewers – as opposed to mass market manufacturers – regular local customers make up a lot of their sales. If those sales drop off, they can face financial difficulties very quickly.”

Price Bailey, meanwhile, recently reported that there had been a 500 per cent increase in brewery insolvencies between 2021 and 2023 (many are likely to have collapsed following the end of COVID-19 support schemes), again citing the difficulty that smaller players face in achieving growth, competing against larger counterparts and attracting customers amid reduced spending.

Price Bailey’s Head of Insolvency and Recovery Matt Howard commented: “This sector poses challenges for entrepreneurs, from entry through to growth. These organisations are up against some big players in the field, and when retailers are feeling the effects of reduced consumer spending, they are even more reluctant to take those big players off the shelf.”

“To reach the retailers you must have a compelling business case, especially so as a lesser-known independent business. It is a real challenge.”

Howard went on to add that breweries are feeling the knock-on effects of struggles elsewhere in the hospitality industry, which are affecting their supply chain. He stated that the cost-of-living crisis is seeing fewer customers visit restaurants, pubs and bars, leading to those businesses ordering less stock from brewers.

There have been a string of notable collapses in the craft beer sector in the past few years, with recent administrations including North Brewing Company, which was acquired out of administration by Vertical Drinks Ltd and Kirkstall Brewery Ltd, Love Lane Brewery, which was subsequently acquired by TJ Morris, and Big Dog Brewing Company, which collapsed last month.


Find out more about M&A activity in the UK hospitality sector

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