THOUSANDS of people are set to visit Nottingham’s famous Beer Festival this week in a nod to the rising popularity of craft beer in the UK.
A Nottingham accountancy firm has seen a sharp rise in the number of new boutique microbreweries over the last year from 291 during 2013-14 up to 361 in 2014-15 – a rise of 24%.
James Simmonds, partner at UHY Hacker Young, said that the increase in the number of new breweries opening in the last year outstripped the number of new breweries opened in the previous year, when there was an 8% rise, up from 269 in 2012-13.
James said: “This dynamic sector of the drinks industry is booming as new start-up breweries are attracted by the growing consumer appetite for their products. Craft beer is viewed as an increasingly aspirational leisure accessory – so the profit margins available can be very attractive.
“The recent success of small brewers across the UK also offers encouragement to budding entrepreneurs and investors.”
UHY Hacker Young says that the number of applications to HMRC to launch breweries has nearly trebled in the last five years, up from 101 in 2009-10 and that the rapid rise has been driven by increasing numbers of start-ups eager to join one of the fastest growing segments of the UK’s food and beverage market.
The firm notes that as a boutique product, craft beer can command a higher price, allowing microbreweries to compete with the larger breweries, such as Diageo and SAB Miller, which benefit from economies of scale, which enables them to produce vast quantities at low cost.
Recent research emphasises the soaring popularity of craft beers with 80% of customers wanting an even greater range, demonstrating the potential for further growth in the sector.
The Government’s Small Breweries Relief Scheme, introduced in 2002, provides tax relief for brewers producing less than 10.6 million pints of beer a year. Tax relief is based on output where the very smallest brewers, those with an annual production of less than 880,000 pints, receive a 50% duty discount. This discount on duty gradually reduces as beer production increases.
Recent breweries which have newly opened over the last five years include:
· The Five Points Brewery opened in Hackney in 2013
· Pressure Drop Brewery launched in Hackney in 2012
· The Knights Worm Catcher Brewery opened in Penge in 2013
· Two Fingers Brewery, launched in 2012 and is the only brand that donates all profits to Prostate Cancer UK.
Applications to HMRC for Cider Duty have increased by 25% since 2013-2014 from 24 to 30 last year. Over the last three years there has been a 131% increase, up from 13 in 2012-2013.
James added: “Cider brewers are also rushing to join the boutique alcohol revolution and we’ve seen a sharp increase in their numbers over the last three years. The drinks industry is providing a lot of new opportunities and it is a great pleasure to see that many people are embracing entrepreneurism by setting up new brands.”
