How Brexit and Covid-19 changed the craft beer industry for good – The Drinks Business

The impact of both Brexit and the pandemic has led to adapted routes to market and speculation that British drinkers palates are changing.

Brewers and independent retailers from across the industry revealed to the drinks business how Brexit effectively reduced volumes of beer intended for export, leaving more highly-hopped beers than usual on our shores. Additionally, the pandemic forced a direct-to-consumer route to market for breweries that needed to sell their beer for their businesses to survive, however, such beers which would have initially been sold through the independent off-trade are now selling via their own online shops with many undercutting former retailers in terms of price.

Cloudwater Brew Co CEO and founder Paul Jones told db: Brexit had made exports quite difficult and not really in the sense that it couldnt be done, but it just took a lot longer, and it was more expensive plus, there was the notion that the landscape of where beer went was changing and this influx was leading to heightened competition. As Jones identified: In my estimation, many of the top 100 craft breweries in the UK sent around 20% of their output to export markets prior to Brexit. Adapting rapidly to find domestic outlets for all that production volume, once the admin and logistic issues hit [it] caused quite a spike in competition within the industry. Jones observed how, as a result, there has never been as much fresh and hoppy UK-made beer available to this market, and that might well change the tastes of drinkers.

Exeter-based Powderkeg Brewery founder Jess Magill admitted: The pandemic did stick us with a load of stock and no customers open to sell it to. I would say we operate much more on the JIT model now a business our size cant afford to overproduce. But equally we never want our products to be unavailable or we lose customers. So its an eternal tightrope.

Similarly, McColls Brewery in County Durham saw that, almost overnight, the entire business model changed and with it there was a margin-boost along with the shift. McColls owner and director Danny McColl revealed how pre-pandemic we were 90% cask-focused, he explained, but somehow, fortuitously, we had just moved into can production and built a webshop in winter 2019, and without this being fully-functional on the day the news broke back in March 2020 we would definitely not be here now. It brought in immediate cash overnight as sales disappeared from trade, and skyrocketed online, obviously at a fairly better margin.

According to London-based independent retailer Hop Burns & Black, retailers understand that brewers did what they needed to do, but there is a limit to how much support a retailer will give to brewers that repay their loyalty by undercutting them now.

Hop Burns & Black co-founder Jen Ferguson said: Indie retailers now operate in a completely different environment to before the pandemic. An already very competitive landscape has been made even more challenging with more and more breweries selling direct to consumers. However I think most retailers are fairly pragmatic about it. We recognise the extreme challenges of todays market businesses have had to pivot and adapt in order to survive. For many breweries, especially during the first lockdowns, going direct-to-consumer was a much needed lifeline.

Ferguson pointed out: It would be unreasonable to ask breweries to stop selling direct, but hugely undercutting your retail partners in the process seems like a zero sum game and said that, unfortunately, while some breweries take care to ensure theyre not sabotaging retailers, others dont weve even seen examples where breweries are selling their beers cheaper on their web shops than we can buy wholesale from them. This makes indies look unnecessarily expensive customers will go elsewhere if they feel theyre being ripped off so retailers may choose to stop stocking that brewerys beers. It also creates a race to the bottom on pricing in which nobody wins and added: The breweries we have most respect for are those that recognise the importance of the wider ecosystem and the part we all play in it. Indies remain a vital route to market for any brewery, providing convenience, selection and importantly the personal service you dont get at a supermarket or web shop, championing breweries, introducing them to new fans, helping create the next craft beer superstars. The next 12 months are going to be some of the rockiest on record and we all need to pull together to make it through to the other side.

Making it out of the other side will mean, for many, adapting and staying as flexible as possible while other issues such as inflation become the next new challenges. After all, the craft beer revolution flourished when there was much less to worry about and every reason for would-be brewery founders to follow their dreams and remove themselves from the rat-race. But now, facing so many hurdles, the new race was beginning to feel more like a marathon.

Jones identified how a number of things have changed, specifically within craft beer within the UK and reiterated that it is really pertinent to talk about it all because pre-pandemic, the craft sector in the UK was definitely growing and felt very, very buoyant and comfortable growing either through organic means or through investment. There were loads of breweries that had taken on significant investment to grow several times their previous annual output in a short space of time and that felt entirely cool. But, sadly, the pandemic compounded a problem that we were all starting to face. He observed: We are living through slightly different times in terms of what people want and what people need. and inferred that the shape of the craft beer scene is changing as a result of all of the hurdles and ultimately, these struggles are absorbing rather a lot of the excitement that craft had initially brought to the nation.

The pandemic has changed everything. I think that some of the frivolity has been replaced by some of the complexities within the scene, he said, hinting that now, all the industry needs is to find new ways to invoke some of its verve and optimism so it can navigate towards a brighter future.

Perhaps a future where the over-saturation of beers made with dank zesty alpha hops will lead palates to seek out post-craft rebellious brews with a maltier backbone .

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How Brexit and Covid-19 changed the craft beer industry for good - The Drinks Business