Brewing industry set for further consolidation

Leading figures in the brewing industry have suggested that further consolidation in the cask ale industry is inevitable.

Speaking less than a month after heading up the purchase of Refresh UK, Alistair Darby, managing director of Marston's Brewing Company, said increased consolidation was unavoidable given the state of the sector.

"By definition there has to be consolidation," he said. "Once a company gets to a certain size you almost have to keep growing because every barrel of beer you brew is costing you more money.

"Every six months the costs are going up - be they duty or material costs."

The last month alone has seen two successful cask ale producers swallowed up by bigger brewers - first Refresh UK, which owned the Wychwood Brewery (producer of Hobgoblin) - and then last week Scottish & Newcastle bought out the remaining 70 per cent of the shareholding in Caledonian Brewery, producer of Deuchars IPA.

"With all of these businesses there comes a point where you hit a ceiling - when you get stuck unless you can find a way of substantially growing your distribution and improving your infrastructure," added Darby.

Licensed trade financial expert Jim Fallon also argued that such consolidation had to happen. However, he added that strategies employed by the likes of Marston's (i.e. keeping purchased breweries open and investing in strong local brands) was a very effective way of moving forward.

"The fact there is an overall decline in the long alcoholic drinks market in the UK means that consolidation is inevitable," he said.

"But that does not mean you will lose great brands and this has been demonstrated by the deals Marston's has done."