Breweries see 500% increase in insolvencies over the last three years, new research reveals

Research by accounting firm Price Bailey, reveals a 500% increase in insolvencies in the UK beer manufacturing sector between 2021 and 2023.

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The findings, obtained under a Freedom of Information request, submitted to The Insolvency Service by Price Bailey, come amid widespread insolvencies throughout the hospitality sector.

The data goes on to reveal an increase of 152% and 197% for licenced and unlicensed restaurants & cafes respectively and an increase of 186% for pubs and bars. Take-away businesses were shown to be the second hardest hit, with a 210% increase, throughout the same period.

Matt Howard, Head of Insolvency and Recovery at Price Bailey, comments: “Many hospitality businesses are on life support, and with the services sector leading the way into recession, business failures throughout here are likely to continue to rise throughout 2024.”

Commenting on the brewing sector, Matt said: “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.”

Matt continues: “The cost-of-living challenges have meant that consumers are less likely to visit their restaurants, their pubs and bars. When these organisations are feeling the crunch, they are then ordering less stock, less beer and ultimately as insolvencies in these sectors rise, those manufacturing the beer are losing customers. It is unfortunate but reflects the classic consequences in many industries, following a reduction in consumer spending.”

“We’re seeing similar impacts across a lot of sectors at the moment.”

Rob Fink, founder and CEO of alcohol-free craft-brewery Big Drop Brewing, comments:

“There’s a real barrier to entry for businesses in this sector now. When I started, you either had to build your brewery, which most start-ups just didn’t have the money to do, or you outsource the brewing to a contract brewer.”

Rob continues: “Contract brewing in the UK isn’t very mature. Most contract co-packing breweries have their own brands and so they are reluctant to enter into any meaningful structured legal contracts, what they’re really doing is filling up the spare capacity they have before their own brand grows to fill it.

“The arrangements lack certainty over volumes, growth and pricing - it’s not a long-term sustainable relationship.”

Big Drop Brewing, founded by Rob Fink and James Kildred, is a pioneer in its sector, with a mission to create an exceptional alcohol-free product.

The organisation has garnered international acclaim, winning top prizes in blind tastings against full-strength rivals and currently operates in Australia, Canada, the USA, and the UK, with its products now available in over 20 countries around the world.

You can learn more about how Rob Fink navigated challenges on his journey from indemnity lawyer to founder of one of the UK’s rising stars in the alcohol-free craft brewing industry in a full interview with Price Bailey Partner, Chand Chudasama, here.  

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