Thursday, December 08, 2011

Will the Bubble Burst?

On reading that another new brewery was to open in Knaresborough, I gave a sharp intake of breath and wondered. A bit of research revealed that this year alone we have 117 new breweries from all over the country, following on from 107 the previous year. That is one hell of a lot of breweries, and a lot of new beer to shift. In these times, with everyone saying that money is tight, can the market actually support all these new initiatives?

I know some will be older breweries renamed or which have moved to new premises and the like, and I assume they will already have a faithful following. Others are brew pubs who will brew mainly for themselves or    just send a small amount into the free trade or festivals, and they too will have a ready made market. If you drink at pub A, and they start brewing, most of their clientele will drink beer brewed on site, and they may even gain a small trade in passing beer 'tickers' wanting to try beer from a new brewery. Possibly a few may move on because they do not like the beer, but many of us are faithful to a pub, rather than the beer, and will adapt our taste in time to the new product.

What that leaves is the vast majority of new breweries, so what of them? Although there has been a rise in the  number of outlets for cask beer, are there enough to support the great increase in new beer on the market? Of course some are supported by good marketing campaigns (Magic Rock for instance), others by making their mark in the more specialist markets (Brewdog spring to mind), but the rest still have to sell their beer into the free trade. Initially this should not be a problem. Everyone wants to sample beer from a new brewery. But gradually this interest will wain and the brewery will need a consistent source of drinkers to support their endeavour, some times this will work (as with Mallinsons), but not every brewery will manage.

However, when I checked my source (actually Quaffale) to compare closures with openings, I discovered that less than 25 have closed in the last two years, which surprised me somewhat. Looking closer, only two have closed within two years of opening, and several have closed to reopen under different names, or at different locations (or possibly relocated to provide more brewing capacity). Maybe my pessimism was misplaced, maybe brewing is one of the few industries on the rise in these difficult times. If this is the case long may it continue, and lets get out and support these new breweries. I am more than happy to give my money to a small cask ale brewer rather than spend it at a supermarket on a cheaper, and usually, less good  product from a large  multi national. But that is another issue for another time.                

Thanks to Will for tidying this post up.  


Curmudgeon said...

Well, at some point the overall trend of declining on-trade beer sales must come into conflict with the rising number of micro-breweries.

It would be interesting to know what proportion of the production of many micros actually goes to beer festivals as opposed to pubs.

The Ale Louse said...

Has it been snowing in Lindley? Brrr... time to hibernate!

Anonymous said...

It will be survival of the fittest ultimately but it is a surprise how few have closed given the economic situation. I would doubt we'll see so many opening next year.

Timbo said...

I did consider both the above points, and I,too, would expect a fall in the number of new breweries next year, but I expected a lot more closures this year as I say the least the difference did confuse me a little and I could find no real explanation for it.
It would also be interesting to know how different breweries allocate their beer supplies, and what percentage profit margins they expect to achieve from their endeavours..but that is a case for an economics blog, rather than a beer blog..lets just be thankful for what we have got !!

Dave Unpronounceable said...

i suspect the economic crisis has actually contributed to the number of brewery openings - plenty of these new outfits will have been financed by redundancy payouts from other careers

the cask ale market is growing, as despite the overall decline in pub numbers it's the ones that an be replaced by home drinking that are going - most people who drink ale still go to the pub to do so

that said, I am surprised by the endurance of some breweries - as often as not, when i try a new brewery I think 'why have you started a brewery' - brewing is not something you do to make your fortune, so to be worthwhile you have to enjoy the process and the finished article - I really can't see the point of starting a brewery to brew dull beer - the big breweries can do that better and cheaper!

Mallinsons Brewing Co said...

Thanks for posting a picture of our brewery in an article called Will The Bubble Burst! We thought you knew something we didn't! LOL

Timbo said...

Elaine...thanks for the feedback.have removed the photo to save any further confusion..will try to do better !!

Udders Orchard said...

Nice to see you have put the Rat Brewery picture up now, Tim!

Will said...

That was me Dave. The post is as much about breweries opening than anything else and what finer example of a bright shiny new set-up is there. The beer's pretty good too!