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28-07-2013, 18:26
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From a beer drinkers point of view there has almost never been a better time. I don't know the exact number of breweries in the country, but I am lead to believe it is well over 1000. There are literally tens of thousands of beers to choose from. Imported beers are also becoming much more available. This is great, and as a beer drinker I love it.

As a brewer though it worries me. I know it also worries other brewers. The total volume of beer being consumed in the country has been declining for some time. Despite this there has been a steady increase in the capacity of micro-brewing. Yes, this is partly driven by an ever increasing demand from drinkers, which in turn, it could be argued, has been inspired by the increasing choice that has occurred.

Locally to me there continues to be a disturbing increase in the number of breweries. I'm not even going to quote a number, as to be honest, I'm not sure it is possible to count.

Here you see I'm starting to be negative, having started this post on a fairly positive slant. I find it disturbing because I do not believe it is commercially sustainable. Really, I simply don't believe it is.

Locally to us here, not Cumbria in fact, but Lancashire, a brewery had been flooding the market with cask beer at below a sustainable price. They were part of a bigger wholesaling company, who in turn was competing at below a sustainable price point. They supplied into Cumbria and made it difficult to compete at a price we were comfortable with, a price that would maintain our margins and enable us to keep up our VAT, duty, staff wages and paying suppliers. The business went into administration owing VAT, duty and several brewers. Not us thankfully, I could see which way they were heading.

What really saddens me is that this business seems to have gone through pre-pack administration and are back up and trading again. Quite legal and above board, at least to the letter of the law. Personally, I think it's a bit out of order. All the depts wiped out.

Now, I'm all in favour of a free market. Every brewer has to make their own choice about where they want to sit in terms of price versus quality. So on the surface you could quite rightly accuse me of being scared of a little competition. And yes, perhaps I am. Because we're working harder than ever, growing the business and investing like mad to make it work, to make sure we are strong enough into the future to survive and be viable, rather than ending up bankrupt.

Many of the brewers who sell beer at below sustainable prices are able to do so because of the progressive beer duty scheme. The scheme is in place to allow small businesses to start up, invest, and become sustainable; to get over the problems of being small.

What in actual fact is happening is that there are a number of breweries, not all I hasten to add, but enough who are dropping prices so low as to drive down the value of beer to the point where by it is not sustainable. Ultimately, the lowest wholesale price of beer has barely risen in 10 years, this is despite significant increases in the costs of brewing.

Now, as I said above, I'm talking about a few breweries, coming in new to the industry and probably not properly costing out their business. Equally, it also bothers me that many don't really seem to know what they are going to do different that will make them stand out amongst all the other small cuddly breweries. I feel the time has long gone where a brewery can survive just because they are a small, local, traditional cask brewery.

There are plenty more who are doing a splendid job, making great beer and selling it at much closer to what I would consider a sustainable price point. Many who are doing something different, have a firm and robust business plan, know what they want to do that is unique and put effort into image and their story.

Even so, I personally feel that there is a danger that the micro-brewery bubble will burst. I even think there is evidence that this could happen soon. Of course, the same could be said about "craft beer" and we need to all watch out for that.

I am often asked for advice from people who want to start a micro-brewery. I always start by saying that they shouldn't, and point out all the long list of pitfalls. If their enthusiasm can get past my discouragement then perhaps they stand a chance.

It seems clear to me that the increase of micro-breweries cannot continue indefinitely. Something will have to give, sometime, and at some point. There simply has to be some casualties, and we can't just blame the beer tie for all of it.

Anyway, all of this came to a head when we were sorting out communicating to the press our recent bronze medals from our little trip to Dublin. As is my MO, I added a little bit to the story (http://siba.co.uk/2013/07/%E2%80%9Csaturated%E2%80%9D-cumbria-beer-market-forces-brewer-abroad/). I'm still unsure if I did the right thing, or if the tone of our press release was right. It did however get into the press and get us noticed, good enough perhaps.

I guess some people will be upset at what I'm saying. Some people might disagree with my thoughts that we're at, or near to brewery saturation. But I do firmly believe that the beer world needs better beer, not just more of the same. We are working hard to improve what we do, and will continue to do so.

What does the reader think? Go on, tell me. My views here are, to some extent, opinion, and you are welcome to disagree.

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