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.

I AM STILL INTERESTED IN WHY BREWERIES ARE CLOSING. DO YOU KNOW WHY THE FOLLOWING BREWERIES CLOSED? ALL INFORMATION VERY GRATEFULLY RECEIVED.

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

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.

APPENDIX 1

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