Craft beer craze has ‘transformed many microbreweries into highly profitable businesses’

By Rachel Arthur contact

- Last updated on GMT

Pic:iStock
Pic:iStock
The number of breweries in the UK has risen by 8% in the last year and 65% over the last five years. Breweries are becoming increasingly profitable businesses, and UHY Hacker Young predicts many more could become acquisition targets in the future.

Brexit could also work in the favor of the craft beer industry. With the weakness of the pound, products made locally are unlikely to be affected by any increase in import charges. However, international breweries may have to increase prices to compensate for the extra costs.   

In 2010 there were 1,026 breweries in the UK, rising to 1,558 in 2014 and 1,692 in 2015.

Craft beer taps into boutique F&B demand

As in other markets across the world, craft beer has boomed with consumers willing to pay more for such products over mainstream brands.

“The popularity and highly regarded global reputation of these products has boosted a demand for craft breweries across the UK, creating opportunities for prospective entrepreneurs in the food and drinks industry,” ​says UHY Hacker Young.

It’s a trend seen across F&B, with the success of the UK’s boutique food and drink market.

“Craft beer, alongside other products such as fine wine and high quality cheese, has made a significant contribution to the profitability of the food and drinks industry.”

In August, The Society of Independent Brewers (SIBA) launched a new craft beer classification to provide greater clarity for consumers looking to purchase beer from genuinely independent craft breweries in the UK.”​ This ‘Assured Independent British Craft Brewer’ stamp of approval has already been taken up by 150 brewers.

Market research suggests that 46% of beer drinkers consider craft beer as ‘made by small brewers rather than large corporations’. Meanwhile, one in ten beer drinkers are unsure what the term means.

35% regard craft breweries as ‘artisanal’ while 22% associate the term with ‘small’ and 14% with ‘local’. 

Acquisition targets

UHY Hacker Young notes that breweries are increasingly becoming attractive acquisition targets.

While such acquisitions may be controversial as far as the definition of ‘craft’ goes, an acquisition or investment from a larger brewer can spearhead growth, with international expansion or extended product lines.

“The success of UK microbreweries is demonstrated by the growth of Camden Town Brewery which, after opening in 2010, was purchased by AB InBev​ in December 2015, and is now expanding beyond Camden by opening a new brewery in Enfield.”

The popularity of craft beer has transformed many microbreweries into “highly profitable businesses for entrepreneurs looking for a niche position in the food and drinks market.”

“As a result of their success, microbreweries across the UK have also become attractive acquisition targets for larger breweries.”

“It is likely that larger breweries will continue to show more and more interest in the smaller breweries that are popping up around the UK, so they can benefit from the interest in craft beer.”

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