Why the independent beer industry needs support
The challenges facing the independent beer sector are many, but according to brewery advisors, there are ways we can help.
Daniel Finn, senior associate at the law firm Brabners who specialises in advising independent brewers and hospitality operators, told the drinks business that craft brewery businesses need to note that there will be “little respite” for “at least another 12 to 24 months” and warned that “we’ll see more breweries having to close down in the near future, particularly those with less financial backing”. But there are ways we can help.
Finn, who leads on Brabners’ work with London brewers, recalled how “breweries have faced fierce trading conditions since the beginning of the pandemic” and highlighted how the nation has already been rocked by witnessing small breweries closing due to energy prices, diminished margins and the cost-of-living crisis having had a detrimental knock-on effect. But hinted that, if we have faith in the industry and want it to survive, there are still a few things we can do.
He explains: “Rising energy costs have significantly weakened brewers’ margins, with almost all steps in the brewing process being energy intensive. These profitability challenges are compounded by some breweries facing falling demand. Beer sales have taken a hit from consumers reigning in their discretionary spending due to high inflation and growing interest rates”. Plus, he pointed out how the “legislative changes to alcohol duty rates and reliefs” are now due to pile on “further challenges to the mix for brewers”. The situation has become untenable and many are bowing out as a result — a situation that nobody wants.
To mitigate disaster, db asked for Finn’s advice on what he would do if he wanted to help an independent brewery ride out the storm. But there is, understandably, not a one-size-fits-all answer to each individual brewery’s woes. He did, however, offer a little counsel for brewers and observed how some other brewing businesses have used initiatives that have assisted in relieving the burdon.
One such way was to a consider buddying up with indpendent food operators looking for timely franchise agreements and profit-sharing models in exchange for vending space. Also, in terms of appealing to the community, he described how loyalty counts for a lot when it comes to continued support.
“Many breweries have started to operate taprooms on site to boost their direct-to-consumer sales and bolster their local reputation, buoyed by partnerships with food trucks and pop-up vendors. Direct sales help to keep margins healthy by negating transport and distribution costs. Building a loyal local clientele can also provide operators with a steady income stream to help offset downturns in off-site and online sales,” he explained.
Additionally, Finn told db that there were other ways that he had seen breweries adoptinf to navigate the strain. For instance, the tapering off of ABV with more and more independent breweries leaning in further towards sessionability across their portfolios.
He observed how “some brewers have also shifted away from a previous onus on high ABV brews towards more sessionable ales and no-and-low alcohol drinks, which are generally more customer inclusive and reflective of modern drinking habits.”
Why? To his mind, it is all about creating much more accessibility to the beers on offer. By broadening the reach of the range by becoming just as appealing to non-hardcore beer fans, but also to people who only dip in and out of the category.
He was quick to add however that, “while no brewery should sacrifice their vision, style and individualism in chasing profits, creating a lower ABV brew or core range to suit all tastes can certainly draw in new customers and raise brand awareness.”
Finn also warned that, if the rest of the UK didn’t start getting behind their independent breweries then there would become a tipping point and the sector desperately needed support from the government as much as it did from those who who claim to love it.
He pointed out how the collapse of the beer industry’s ecosystem will, essentially, pull from all corners of farming through to the hospitality industry. Recognising how beer has, historically, been a sturdy pillar for both the economy and the nation. And that even the general public needed to be aware of the impact of its disappearance. Indeed, when one pillar falls, he hinted, many others cannot take the strain and crumble around it.
“Breweries support thousands of jobs from the hop growers through to the tap pullers – with pub culture and beer festivals being part of the national fabric,” he said and insisted: “There is a real danger that many brewers will be forced into closure without customer and government support through these tougher trading periods.”
Taking stock of this in an advisory capacity, Finn mused on how the sector has many times over been a beacon of light at the end of the tunnel for so many people. Even in the toughest of times, the sheer variety of styles now available for those who adore beer right through to those who choose sobriety has meant that there is something for everyone. And in the past few years during so many challenges, the industry has shown how it can stay relevant by constantly offering people options to suit their preferences and lifestyle choices.
He outlined how, in many ways, that variety has even assisted the industry. Retaining a level of excitement, intrigue and curiousity — proving it can remain relevant during times when so many may have felt that it was easier to give up.
Indeed, many consumers, perhaps before the pandemic, did not even uphold the importance of their beer community. But now, knowing how local pubs and breweries have shared in that perilous journey, has bonded them and created an element of solidarity that it would be unfair to overlook.
Time and time again, the independent brewing sector has constantly gone out of its way to reinvigorate and reinvent itself and reach out to people. And, as such, many can witness how breweries and pubs have become representative of neighbourly hope.
As each brewery reconsidered its portfolio and communicated with its fans, followers and local community, it effectively illustrated that there was a brighter future, both figuratively and literally, just around the corner.
As Finn explained: “The variety of beer that has become widely available to consumers has grown exponentially over the last decade, with greater choice in pubs, supermarkets, bottle shops, and venues including football grounds. This healthy competition has driven improvements in overall quality, consistency and safety standards.” All of this, he pointed out, has adapted the industry in shape and size and assisted in the way it has evolved.
But, he warned, it is important that we help the brewing industry survive. Together. Because, without it, we only go backwards. And highlighted how crucial it is that we recognise the importance of the industry. Not just to “avoid a regression to days gone by where drinking choices in many venues would be limited and no-and-low alcohol drinks were unheard of” but also “to safeguard jobs”. For the positive benefit of the sector, he insisted: “It’s vital that we support these independent businesses.”