‘Business closures time-bomb next year’ warning issued

By Nikkie Thatcher

- Last updated on GMT

Sector closures: the number of breweries fell by more in 2020 than previous years (image: Getty/Klaus Vedfelt)
Sector closures: the number of breweries fell by more in 2020 than previous years (image: Getty/Klaus Vedfelt)

Related tags Beer Legislation Siba Brewing

Rising costs in materials including fuel, CO2, energy, bottles, cans and packaging are making it impossible for many small and independent breweries to recover from lockdowns, one trade body has stated.

The Society of Independent Brewers (SIBA) reported widespread closures last year with the number of UK breweries dropping considerably due to closures caused by the pandemic, which continued into 2021.

Costs are increasing for brewers with reported hikes of almost three quarters (73%) for CO2, energy up by more than half (57%), beer cans up a fifth (20%), cardboard packaging rising by 22% alongside an average of 17% increase for vehicle fuel costs.

SIBA chief executive James Calder said: “Increasing costs of brewery supply services such was water, energy and CO2 are being seen at the same time as the price of cardboard, glass bottles, cans and even yeast – making it incredibly difficult for the small breweries who survived the pandemic to fully recover.

“Even where pubs have already increased prices, this has not been passed on to brewers and while nobody wants to see the price of a pint rise to an unappealing level, what we really don’t want to see are widespread brewery closures that will see consumer choice plummet.”

Calder went on to call for the Government to support the brewing industry or face further closures into 2022.

He added: “The total number of breweries in the UK fell for the first time in more than a decade in 2020 and that figure is likely to drop even further by the end of 2021, leading to job losses and a reduction in availability of quality local beers in some areas of the country.

“If the Government doesn’t begin to back rather than burden small breweries with tax rises, then we are headed towards a time-bomb of brewery closures in the new year.

“The Chancellor needs to provide significant breathing room and support at the Budget otherwise many communities will lose their local pint.”

CO2 prices

While CO2 is seeing the biggest increase in cost, with an average of 73%, some breweries have seen prices rocket by 215% alongside a four-week delay, SIBA said.

“Some of the larger increases such as the huge triple-digit surcharges we’re seeing on CO2 are likely to be a short-term spike but the supplier companies expect an increase of about 10 to 20% to be permanent, which joins the list of increases brewers are seeing on everything from workforce to water supply.”

Swansea’s Boss Brewing owner and SIBA national chairman Roy Alkin echoed Calder’s calls about the risk of closures.

“As a nation, we all want to get back to work and back to some kind of normality and as the cost of living rises, employees need to be treated fairly and have wages that reflect inflation, but these changes cannot be viewed in isolation and come as part of a whole host of cost increases for small breweries,” he said.

“Many brewing businesses are reaching breaking point and where businesses close, many thousands of local jobs across the UK will be lost.”

Alkin went on to outline the additional costs on haulage and fuel being passed on to firms like brewers is adding to the pressure.

Longer lead times

He added: “Many local hauliers have introduced fuel surcharges and we have seen our own haulage and delivery costs rise by 30% - some will even restrict service during busy periods, which causes further issues – in short, it is a complex situation where breweries are seeing reduced service and support for a heavily increased price.”

Mondo Brewing, which is based in Battersea, south west London, has reported cost hikes of 10 to 40% on everything from petrol to packaging.

Co-founder and director Todd Matteson said: “After a tough year of lockdowns, business has picked up substantially, which has been welcomed. 

“However, we’re faced with rising costs and longer lead times across the board with cardboard, haulage, and energy, among many other things. 

“And to top it all off, the CO2 shortage is wreaking havoc on all of us.  All of these things combined are putting a great deal of pressure on the brewing industry, especially for the craft breweries, and will ultimately result in higher prices to the consumer."

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