Thursday, 6 March 2014

What closes a brewery? It's probably the quality of its beer

After my two posts on the thorny subject of the reasons breweries close, the subject has been taxing my mind. I have come to realise breweries stop operating for a range of reasons, from changes in owners’ personal circumstances right through to the premises they occupy being sold. Undoubtedly, the breweries that are most interesting to me are those that closed because they were, according to their owners, unprofitable. But why were they not making money? Are there too many new breweries being set up, the result being there are not enough ale-loving consumers to sustain them all? Or were the closed breweries’ beers undrinkable to the point that no discerning pub-goer would touch them with a barge pole?

I resolved to answer this ‘market’ vs. ‘quality’ question. It would be impractical for me to measure if there are too many breweries in the UK for the market to sustain them all; this would require time, resources and data sets which I have no chance of acquiring any time soon. So, I decided to attack the ‘quality’ issue, to determine whether the breweries that closed citing alleged unprofitability did so because they produced beer that was simply not good enough.

On a night out, when I decide to log and rate the beer I am drinking, my girlfriend finds it amusing. I am, there is no doubt, a bit of a ‘beer spotter.’ I log my beers on Untapped website, but the dominant player in the ‘beer logging’ world is On it, users can give beers a score on a scale of one to five, and the beers’ average score is then calculated. As more drinkers rate the beers, these average scores are updated accordingly. It is these scores that I have used to measure the quality of breweries’ beers, give each company what I am calling an ‘overall beer rating’, then determine whether beer quality is a factor in their survival.

The fairest way to calculate the overall beer ratings was to use weighted averages (see end note for a description of my calculations – I won’t explain it here, that would be dull). I have calculated these for all the breweries that I know have closed in the last three years because they were allegedly unprofitable, as well as those that have been taken over by new owners. For comparison, I have also determined the overall beer rating for an similar number of producers that have opened in the last three years and are still operating. These were mostly chosen at random; however, I have also calculated the rating of three breweries which have national recognition as producers of excellent beer.

The results are shown in the graph below. Breweries that have closed citing unprofitability are in crimson, those that have been taken over are in orange, while breweries that are still operating are in blue. I have anonymised the breweries to avoid understandable embarrassment (and perhaps some self-congratulatory back-slapping).
Closed: Crimson         Taken Over: Orange        Still Open: Blue
While it is important not to overstate the value of these results – after all I have only worked out forty-one breweries’ overall beer ratings – they clearly suggest that there is a correlation between the quality of beer a brewery produces and its survival. If we consider the breweries in the sample that have the twenty-one lowest overall beer ratings (2.653 to 2.941), only five of these are still open. Nine that closed down citing unprofitability were in this end of the graph, while seven that were taken over are here too. Consequently, it can be very easily suggested that these breweries ceased trading because their beer was not of a high enough or consistent quality to appeal to drinkers.

Conversely, if we look at the twenty breweries with the highest overall beer ratings, the situation is reversed (2.941 to 3.550). Only three of the breweries that closed down citing unprofitability are in this end of the graph, as is one brewery which was taken over. Because they are here, rather than at the other end of the graph, it is plausible to suggest factors aside from their beer quality caused their downfall. For example, they might have expanded their operations too quickly and were subject to unsustainable debt repayments. Notably, sixteen of the breweries in this end of the graphic are still open, with twelve having ratings of greater than 3.00. This heavily implies that those breweries that are producing more impressive and appealing beers are more likely to stay open.

While these findings are very tentative, I feel that this research has started to reveal something important. It strongly suggests that the quality of a brewery’s beer is a major determinant of its survival. Of course, in some cases other factors will have played a role in a brewery's closure, but, simply put, the market seems to be working. Those companies that fail to provide drinkers with quality products are seemingly doomed to fail, while others that excel, innovate and possibly take risks, are more likely to be successful. In future posts I will consider these points in more detail, as well as reassess them.

All comments and ideas are, as usual, very welcome.

End note on weighted averages

The weighted averages (breweries’ overall beer rating) were calculated by multiplying each beer’s average rating by the number of ratings it had received, adding all the beer’s scores together, and then dividing this by the total number of ratings all the beers had been given. The table above is an example. The benefit of this approach was that if the majority of a brewery’s beer received a low rating, but they had one short-lived product that was rated as exceptional, both these things would be reflected in the overall score the brewery received. A short example will explain this. If a brewery produced in a five year period two beers which had an average rating of 2.33 and 4.27 respectively, a basic calculation of the brewery’s overall beer rating would be as follows:

(2.33 + 4.27)/2 = 3.30

But consider if the first beer was rated 150 times, and therefore was theoretically produced for a long period, while the second beer had only received five ratings, and thus had a short production run. The consequence of this would be that the overall beer rating of 3.30 would not be an accurate reflection of the quality of the majority of beer the brewery turned out in its existence. The weighted average solves this problem, as it takes into account the extent to which each beer was produced. The calculation is as follows:

((2.33 x 150) + (4.27 x 5))/(150+5) =
370.85/155 = 2.39

Thus, the weighted overall beer rating for the brewery is 2.39, which is much closer to the score the majority of its beer received, but does take into consideration the one time the company brewed a superlative beer.

Sunday, 16 February 2014

Reasons for UK brewery closures, 2010-2013: Revisited

One month has passed since I posted on the reasons British breweries may have closed between 2010 and 2013. At that point I had garnered information on why twenty-nine breweries ceased trading . Then the beer community delivered. In the ensuing weeks, underneith the post, informed drinkers and brewers gave of their knowledge. Because of this very excellent and appreciated response, my sample size is now up to forty-one. The revised results are found in the table below.

In short, the extra data has not really changed my results, although what are marginally more secure are my findings. What they say about the current state of the brewing industry is, however, still up for debate.

We still see that about a fifth of the breweries closed because of 'personal' reasons (19.51 per cent). For instance, Howard Christie, the owner of Great Gable Brewing in Cumbria, closed down its operation after twelve years, principally because he retired (other reasons were also cited). In an industry where a large proportion of the companies are small in scale and, perhaps, run by one or two people, we should not really be surprised that sometimes they close because of personal reasons. Their existence is dependent on a small number of people's dedication, thus the tragic event, an illness, or even a happy one, the birth of a child, may put pay to the brewery.

Fifteen breweries, 36.59 per cent of the sample, have ceased trading because of changes in business structures. In some cases the breweries have not really closed, they are just under new management or have been renamed.Why the Ufford Brewery was renamed The Stamford Brewery remains to be seen: did new management change the name, or was this just a change based on the owner's preference? Other breweries have closed because business partners entered into new brewing ventures, as was the case with the two partners of Chester Ales. Overall, the fact that over a third of breweries have closed (or been re-named), but beer is still being produced by the brewers elsewhere or by new owners, suggests that there is still a great deal of dynamism in the British brewing industry. Individuals are looking for new opportunities, moving on to bigger and better ventures and taking what they have learnt in one brewery to another operation.

There may however be a dark-side to these figures. The purchaser of an existing brewery may indeed be looking for a new opportunity, but what was the brewery sold in the first place? Personal reasons on the part of the owner may again be a factor, but the very real possibility exists that the brewery was unprofitable. The data shows that of the forty-one breweries in the the sample that have closed, in thirteen cases (31.71 per cent) the owners claimed they were financially unsuccessful. Thus, if we consider that some of the taken-over breweries were also not making profit, the reality could be is that this figure could be much higher; possibly as much as fifty or sixty per cent of the sample.

In the last post, I posited that such results may indicate that we are approaching a 'brewing bubble.' In short, my idea was that more breweries may be opening than the market can sustain, meaning there is less trade and less profit for all. Of course, this may be a possibility - only time will tell if this is so. Yet, in light of some insightful comments from various quarters, I am more skeptical about this argument . The most thoughtful and useful response was from Denzil Vallance, head of the Great Heck Brewery.  For me his most interesting comment was this:

My reading of the past 6 Cask Ale Reports by SIBA, which show locally produced cask ale volumes growing at approximately the rate that the producers are expanding in number and capacity leads me to believe that it is supply that is driving growth and supply is nowhere near the potential demand as the market matures.

I considered this point carefully, and have become increasingly sympathetic to it. Then I started thinking about the number of breweries that have actually closed each year between 2007 and 2013. As the table below shows, the ratio of opened to closed breweries has increased every year over this period, apart from in 2009, with the ratio jumping massively last year.

Okay, on their own these figures don't tell us that much. Yet, combined with the data from SIBA, it could easily be argued that the market for cask and craft ales is indeed still growing, as Denzil suggests.

Nevertheless, if the demand for quality ale is still growing - something that I need to find some way to prove - why would some breweries be unprofitable? Denzil makes the point that many of the breweries who fail to perform well could be managed poorly; an idea I am very open to. New breweries, he argues, are producing inspirational and innovative beer, which leads older concerns to raise their game. Consequently, the overall quality of beer sold to consumers in Britain is pushed higher and higher. A brewery's lack of profit could, therefore, be the result of it not raising its game to keep up with its competitors. Their beers, which were inspirational five or ten years ago, are now average in comparison with the newer products available. The final point of this resting on their laurels is, unfortunately, that they go out of business.

Management failure is present in all industries; the brewing industry will be no different. Of course, a brewery's closure because of 'management failure' and a subsequent lack of profit may not necessarily be the result of inferior output. The owners may expand their operations too quickly, leading to excessive capital costs and high debt repayments; they may negotiate disadvantageous contracts for supplies, or they may not appreciate the value or need for marketing. Truthfully, there are a multitude of reasons why breweries may be managed poorly. Clearly, I will have to undertake much more research to understand the extent and nature of 'management failure' in the modern brewing industry.


Blackawton Brewery
Blackfriars Brewery Limited
Brass Monkey Brewery Company Limited
The Chorley Brewhouse Limited
Cleveland Brewery
Croglin Brewery
Fallons Exquisite Ales
Fowler's Ale (Prestoungrange) Limited
Golden Valley Ales
Hetty Pegler Brewery
John Eastwood Brewery
The Jones Brewery
Justice Brewery
Malt B Brewing Company
Moorview Brewery
Nomad Brewery 
Norfolk Cottage Brewing
Poldark Brewery
Ringmore Craft Brewery Ltd
Rudgwick Brewery Limited
Shifnal Brewery
Swaton Brewery
Tap House Brewery Ltd
The Taunton Brewing Company Ltd
Thorne Brewery (Yorkshire) Ltd
Toad Brewery
Toft Brewing Company Union Brewery Ltd
The Urban Brewhouse
The Windlestone Brewery

Monday, 3 February 2014

Anspach, Hobday and the Beers New Breweries Brew

One of the true pleasures of living near Tower Bridge is that I am on the doorstep of many wonderful breweries. Kernel, Brew by Numbers, Partizan and Fourpure are all round the corner, and many-a-Saturday afternoon I can be found sitting at their wooden tables quaffing their delights. This week, however, a special event occurred: my friends and I ran into the opening day of the newest brewery in town, Anspach & Hobday (A&H). Pleasingly, this is less than a minute’s walk from my house under a railway arch.

On entering, the buzz in the air was very real, very palpable. Something new – perhaps something great – was getting started here. Those serving, who were all involved in the company, were clearly proud of the two beers on sale: ‘The Smoked One’ and ‘The Porter’. Pleased to chat to those coming through the door, I got talking to Paul Anspach, one of the founders of the brewery. His and Hobday’s road to setting up a brewery was a familiar one. About two years ago they started home brewing, inspired by the range of good quality beer coming out of America. They decided to move to commercial brewing in late-2012 and raised money to do this through a Kickstarter campaign – the first example of crowd-funding in the British brewing industry that I have come across. Gradually, they refined their recipes, worked out the kinks and moved into permanent premises in November 2013 (118 Druid Sreet, Bermondsey), but not before their porter had won a Silver Medal in the International Beer Challenge – an impressive achievement for a new brewery.

A poured and devoured 'The Smoked Brown'
A&H are interesting to me as brewery for two reasons. While they have an IPA in the works, their brown ale and porter are clearly their centrepiece products, reflecting the brewery’s ethos of brewing traditional London beers. The Porter is sublime, but that’s clear from the Silver Medal and I am sure it will get many reviews. But to my mind the brown is excellent too. While smoky in texture, the beer also has notes of vanilla, nuts and caramel and a slightly bitter after-taste, which combined make a highly drinkable brew.

The second point of interest about A&H is that their choice to lead on their first day with a porter and a brown ale is going a bit ‘against the grain’ of what new British breweries are doing. Over the last two weeks I have been compiling through links on the Quaffale site a database of the beers produced by breweries which started operating in 2013. The goal was to see whether there are any discernible trends or fashions in what new entrants into the market are choosing to brew. Because I realise most of these breweries are small, I have not included those beers that are seasonal, and instead have been logging their core ranges.

According to Quaffale’s lists, 166 breweries started operating in 2013 (not A&H though – this has been included in the sample), but I only found beer information for ninety-two, mainly because many have not established websites yet. These produced in total 370 different beers, meaning that on average each brewery produces 4.02. The brewing industry does not seem to have standard names for beer styles, the result being that I logged forty-two of these. Now, my knowledge of beer styles is not comprehensive, but I sorted these as best I could into fourteen categories: the results are below. The first and second columns detail the number of beers in each category that are in production, while third and fourth show the number of breweries creating them (a more detailed breakdown can be found at the end of the post – Appendix 1).

The headline story from this data is that those beers at the lighter end of the beer spectrum – your Pale, Amber and India Pale Ales – are dominating the output of the new breweries. 169 of the 370 beers in the sample (45.68%) are of these types, and they are brewed by eighty-five of the ninety-two breweries (92.39%). It could therefore be inferred that new British breweries are influenced heavily by those in America, where pale ales are all the rage, even perhaps if the brewers themselves don’t know it. Breweries opening in 2013 may be following trends established by new companies which started operating some years ago, who themselves were influenced by the American brewing scene’s preference for lighter beers. That said, an alternative suggestion is that most new breweries are simply brewing paler beers to meet market demand, having realised that darker beers just do not sell as well.

Traditional Bitters come in second on the list, with sixty-five of these beers (17.57%) being brewed by fifty-two of the breweries (56.52%). Clearly there is still a large market for Bitter, but perhaps its popularity is in decline? For many decades Bitter was considered the quintessential British beer, but if it was a popular as tradition would dictate, it could be argued that it should dominate my sample, which it does not. Indeed, its popularity may be suffering because of the rise of the paler ales. Ultimately, only further research will reveal whether this so. (EDIT: Thanks to Richard Conroy who correctly pointed out that I am not taking into account the volume of beer produced, just the number of brands launched - see his comment below.)

The data also suggests that dark beers – stouts, porters and, perhaps controversially, black IPAs – are also popular. Given forty-one of the breweries set up in 2013 (44.57%) are producing between them fifty dark beers (13.51%), it can be suggested there is a healthy market for them. I’ll even go further and make a massive assumption based on my own experience.  I remember a time when porters were hard to find in pubs and the only stout available was Guinness. Thus, as darker beer styles are more common, I suspect they are gaining in popularity.

Some beer types are only produced by a few breweries. Ten beers (2.70%) produced by ten breweries (10.87%) were ‘Red’ or ‘Ruby’; Six breweries (6.52%) are producing seven strong or imperial beers (1.89%); thirteen Belgian-style beers (3.51%) and produced by six companies (6.52%), and, lastly, fifteen producers (16.30%) are producing between them nineteen brown beers (5.14%). In addition to a wide range of other styles shown in the table, it would seem that very wonderfully there is a diverse range of beers being produced in Britain in varying volumes. There will be many reasons why breweries are producing a varied array of beer styles: customers may request them, the brewers may be acting on a whim, for some reason a market for a particular type of beer has developed in a particular place, or, possibly, the owner of a brewery may simply like a style. Clearly, I need to do much more research on this.

But how do the excellent beers of A&H fit into all this? Given I have suggested that the market for dark beers is potentially growing, their medal-winning porter will undoubtedly do very well indeed: its reputation can only go from strength to strength. Their brown beer also has the potential to go far, despite this style not being brewed so often by new breweries. Given the beer’s high quality, the unique fact that it is smoked, and the fact that the rising popularity of dark beers may broaden the appeal of their slightly lighter brown cousins, I am sure it will likely draw beer hunters in from far and wide.


Note: As I am no expert on beer styles, any suggestions and corrections are welcome. 

Saturday, 18 January 2014

"It did not make sense for us to carry on": Reasons for UK brewery closures, 2010-2013

One of the most difficult challenges in my work to understand the modern brewing industry is to determine how profitable breweries are and the factors that influence their success or failure. After all, your average brewer is highly unlikely to let me look at their accounts book. So last week I decided that one way to undertake this task was to look why breweries have shut their doors and ceased brewing in recent years. After all, if a lot of them are closing for financial reasons, this may indicate that times are tough for the industry, despite media reports that wax lyrical about the plethora of breweries opening and the vast bounties of beer available to drinkers.

Determining the causes of brewery closures was not easy; in fact in a lot of cases I simply did not find any explanation, despite spending hours on the internet searching. Given time constraints, I was only able investigate closure reasons for fifty-three of the seventy-nine breweries that the Quaffale website listed as having ceased trading between 2011 and 2013 (plus one other known case). I only found the information I needed for twenty-nine of them. Okay, this is not a huge sample, but it is all I have for now (work continues). My results are shown in the table below, from which some tentative conclusions can be made.

It is clear that a significant proportion of the breweries sampled have closed for non-financial reasons. Five ended their operations for what I have termed ‘personal’ reasons. For example, Angus Ales in Carnoustie – which produced a range of golf-themed beers – closed in December 2012 because the owner was in an accident, after which he felt he sadly could not go on.

There are also a twelve breweries, 41.38 per cent of the sample, which closed because of changes in business structures (this is, however, a very loose category). The story Jolly Brewer microbrewery in Wrexham is one example. Its owner, Pene Coles, had started selling her own bottle conditioned beers from her shop – which by no coincidence sold home brewing supplies – in 2000. But around a decade later she was convinced by Sarah Atherton and Keith Porter to join them in running the fledgling Sandstone Brewery. There is however one major issue regarding the breweries that ceased trading because of alterations to business structures. Seven breweries were sold as going concerns or taken-over, but I have found no information on why their original owners put them up for sale in the first place, which raises further questions. For example, were unprofitable breweries sold to new owners who hoped - however misguided that hope might be – that they could be turned around? Anglo-Dutch Brewery, which was started by Mike Field and Paul Klos in 2000, was sold in 2011. Under the stewardship of Richard Sharpe and Paul Horne it has now become the Partners Brewery Ltd. Why Field and Klos gave up brewing is a mystery? It could be for financial reasons, but naturally many other explanations are possible.

Only four breweries have closed because of property issues. The Botanist brewpub, which operated between 2011 and 2013 in Kew, London, was taken over by another company who promptly shut the brewing operation down. In three other cases the pubs which hosted the breweries shut, which could be linked to financial circumstances of the pub trade and not necessarily to do with the profitability of the brewery operation.

Lastly, eight breweries explicitly stated that they ceased operations because their financial performance was poor. If we also consider that some of the other breweries above may have been sold because they were unprofitable, a maximum fourteen of those in the sample, just under fifty percent, possibly fell on hard times and ceased trading.

The Devilfish Brewery closed in January 2013
Although, what was noticeable in my research is that different breweries have given varied reasons for their poor financial performance and closure. Let’s start with the Devilfish Brewery, which closed in early 2013. Its owner stated that ‘…the truth of the matter is that over two years we've made loads of money for the Government and no money for ourselves.’ For them it was the case that the beer duty cut into their profits. They cited no other reasons for their profitability diminishing and their eventual closure. Conversely, the owners of another brewery, the Northcote Brewery in Norfolk which closed in early 2012, took a slightly broader view. They stated its closure was due to a ‘number of different factors…more people drinking at home instead of in pubs, and the rising costs involved in making beer, such as ingredients, transport and tax.’ To my mind this seems a more logical explanation for a brewery's closure than just blaming levels of tax – although this undoubtedly is a factor. Indeed, the impact of the cost of transport and ingredients on breweries' cost positions will have to be assessed in my future researches.

Lastly, and possibly forebodingly for the brewing industry, two breweries have cited a fall-off in trade as being the reason they closed their doors. Lynne Booth, manager of the Oakwell Brewery, which stopped brewing in late-2013, stated that ‘sales were down and not enough money was coming in.’ This was particularly a problem as the company had to maintain a huge building which was in a state of disrepair (This was the site of the Barnsley Brewery which operated between 1888 and 1976). The second casualty of note was the Breconshire Brewery in Brecon. Opened by C.H. Marlow in 2002, its beers soon won awards and its Golden Valley Ale was the star. Yet, when it closed on 31 December 2013 Harlow blamed “a competitive and fragile market”. When the Breconshire Brewery opened there were ten breweries in South Wales; by 2013 there were sixty, plus another in Brecon. Also, the closure of pubs had not helped the company's trade. As such, the brewery’s production had fallen from a peak of 40,000 gallons per year to 10,000 in 2012 and the business had lost “money during the last few years so we had no option but to close”.

The important thing to note here is that this is a clear statement from a brewer that suggests that the growing number of breweries in Britain is diminishing the available trade for them all. Combined with the evidence presented above, it could be possible that were are we currently in the era of a brewing industry bubble that is waiting to burst. As more and more breweries are open, and the number of ale drinkers flat-lines or, at most, grows slowly, it could possibly be argued that the amount of the market share each can capture will shrink. The result may be that many breweries will either struggle to get by month-by-month or eventually they will close.

Of course, a possible 'beer bubble' will not be the only reason why unprofitable breweries closed in the last three years. With many new companies entering the market it may simply be that some of their owners lacked the brewing or managerial skills to run a full-size brewery profitably. They may have expanded their businesses too rapidly, they may not be advertising their products effectively, they may not even be brewing good beer (and I think we can all agree we have had some ropey pints in our time). These considerations are particularly pertinent if we consider that numerous individuals are transitioning from the hobby of home brewing to full-scale commercial operations, two things which, apart from the fundamental aspects of the brewing process, are quite different.

But determining how well companies have been run will be hard, brewers are not going to admit if they were simply not up to the task. Yet, it is hoped that as my research progresses some information will be turned up. Who knows what this week will provide.

Edited: 20/01/2014, 22:22

Thanks to Denzil of the Great Heck Brewery for posting a response here which has alerted me to a few things and has certainly made me reconsider some points.

Thanks also to everyone who has contributed information, it is very appreciated!


Blackawton Brewery
Blackfriars Brewery Limited
Chorley Brewhouse Limited
Cleveland Brewery
Croglin Brewery
Fallons Exquisite Ales
Fowler's Ale (Prestoungrange) Limited
Golden Valley Ales
Great Gable Brewing Company Ltd, The
Hetty Pegler Brewery
John Eastwood Brewery, The
Jones Brewery
Justice Brewery
Malt B Brewing Company
Moorview Brewery
Nomad Brewery llp
Norfolk Cottage Brewing
Northcote Brewery Ltd
Oakwell Brewery
Poldark Brewery
Red Rat Craft Brewery
Ringmore Craft Brewery Ltd
Rudgwick Brewery Limited
Shifnal Brewery
Swaton Brewery
Tap House Brewery Ltd, The
Taunton Brewing Company Ltd
Thorne Brewery (Yorkshire) Ltd
Toad Brewery
Toft Brewing Company
Union Brewery Ltd, The
Urban Brewhouse, The
Windlestone Brewery
Wyre Piddle Brewery

Sunday, 12 January 2014

Success?: The Number of New Breweries in the UK 1993-2013

In my quest to understand the business of the modern brewing industry, one of my key questions is how successful are the plethora of new breweries that have started up in recent years? Do they make profit very early on, given the strength of the market for beer? Or do they initially struggle and only flourish when a particular beer, or for that matter a range of beers they brew becomes popular amongst consumers? Common sense, and my less-than-refined instinct, says that the latter is the case. For example, I do not think it is unreasonable to suggest that the Oakham Brewery's beer Citra, which remains commercially popular, was a major factor that led to the company’s sustained success.

However, in trying to get under skin of the modern brewing industry, I am acutely aware that for the most part brewers will not be willing to share their financial results with me. This is commercially sensitive information. So I am going to have to take another, less direct approach. We frequently hear in the press that breweries are opening every day, and as a beer drinker I rejoice at the beer bounty coming our way. Using data on the wonderful Quaffale site, the number of brewery openings between 1993 and 2013 can be tracked. As the graph below shows, without a shadow of a doubt we are in period when there is a boom new breweries, with 656 opening between 2009 and 2013.

Graph 1: The number of UK breweries opening 1993 to 2013
But this graph tells us next to nothing about success of breweries. It just indicates that an ever-increasing number have opened over the last twenty years, not how many have survived. Indeed, some breweries contained in the data set above have closed. Take for example the Devilfish Brewery, which was based in Hemington, Somerset. This opened in summer 2010 using a 4.5 barrel plant and then promptly closed in January last year for reasons that are unclear. As such, it could be that while the rates at which breweries have opened in recent years has been high, survival rates are low. Clearly, to get a better picture of the how breweries are surviving, the rate at which they have closed needs to be considered. The second graph below shows the number of brewry closures between 1993 and 2013, as well as the net number of brewies opening.

Graph 2: The number of UK breweries which closed, 1993-2013
Only in 1999 and 2000 did the number of brewry closures exceed the number of openings, which would heavily suggest that since that time more brewries are surving. But the survival of a brewry does not necessarily mean it is a success. Many may simply cover their costs, rather than making any profit. For instance, if we take (at random) the Adventure Brewing company, which opened in Chessington in 2012, it is highly possible that it is struggling to stay solvent week to week. Apply this logic to all the hundreds of breweries that opened in the last four years and, combined with the fact that there are growing numbers of breweries serving the around the same number of consumers, it may be the case that the majority of them are surviving by the skin of their teeth.

But how can I gauge whether this is so? Using the Quaffale database, as well as other sources, in the next week or so will be looking for information on how and why breweries have closed in the last four years, as this may give an indication of the state of breweries' finances. Indeed, some may have ceased trading because of issues with the profitability and performance of trade – as was recently the case with the Breconshire Brewery. Nevertheless, other factors may have put pay to breweries, like the demolition of rented spaces, take-overs or even the fact that the owners got bored. Hopefully by the next post I will have a full picture. Any contributions will, of course, be welcome.

Sunday, 5 January 2014

We don't understand Britain's beer revolution!

At the current time the beer industry is considered to be alive because of a massive injection of enthusiasm and ideas; according to the Campaign for Real Ale (CAMRA) in the past year 187 breweries have launched themselves into the market. This river of beer has also not gone unnoticed by the press. The Telegraph proclaimed that 'A Craft Beer Revolution is Brewing' (13 December 2013) and the Guardian urged 'all hail the British craft ale revolution' (26 October 2013).

For the consumer more breweries, more beer and more choice is undeniably a good thing. Living in London, near the South Bank, I don't have to go far to find evidence of this new beer revolution. Up the road from me is the wonderful Kernel  Brewery, across Borough Market is Brew Wharf, going a bit further would lead me to the Meantime Brewery, while in my local vicinity I have six dedicated ale pubs serving a cornucopia of different beers from across Britain. I am, without a doubt, sharing in the beer bonanza.

But can it be considered that because of these trends  the brewing industry is successful? The story of the new UK's beer revolution tends to be written, in large part, by those on the outside of the industry who consume its products. We hear precious little about what is going on inside it. For example, is the beer market is becoming saturated? Do changes in the price of ingredients alter which beers are produced or is this down to the whim of a brewer? How many breweries are producing beer that is poor that may lead to their eventual closure? Are brewers thinking the market for beer will grow, or is their uncertainty amongst them? Where do new entrants learn how to run a brewery and what is information sharing like in the industry? Lastly, are any of the new breweries making profit? No one outside the industry can realistically answer these and other questions...yet.

Being fascinated about the management and operation of the modern brewing industry - something that stems from my career as a business historian - yesterday I issued a simple request on Twitter: 'does anybody know of a micro/craft brewery that may want to talk about their finances and business model?' The response was not encouraging. I was advised to contact a number of breweries, but in general I got the impression that getting under the skin of the industry would be hard. But I am not fazed, I plan to go ahead a project to understand it as much as I reasonably can. My findings, I hope, will be documented here.

I have a starting point though. One brewery, the Pilot Brewery in Leith, replied to my request, albeit briefly. After less than a year of operation their finances were 'perilous' and their business model was 'ill-thought-out'. This was a slightly tongue in cheek comment, but could this be the case with some new and young breweries? I can't tell you, but I hopefully will be able to in the future....