2024 Reflections & 2025 Predictions

2024 was a year to remember in brewing! 🍺 From sustainability wins to industry shake-ups, join me, Chris as I share:

🖐️ My top 5 brewing highlights
👨‍🏫 Lessons learned across the year
🔮 Bold predictions for what 2025 might bring

Timestamps:
00:00 - Welcome to the Show!
02:12 - 2024 in Review: The Biggest Wins
07:45 - Chris’s Top 5 Moments of 2024
15:32 - Sustainability: Where Are We Winning?
21:05 - Brewing Predictions for 2025
28:50 = The Challenges We Need to Face
34:12 - Listener Questions & Reflections
38:40 - Final Thoughts and Wrap-Up

A huge thank you to Brewing Trade for sponsoring this episode. Don’t miss out—hit play now and let’s raise a glass to a big year ahead! 🍻

My LinedIn - https://www.linkedin.com/in/chris-lewington/ 

Transcript

0:13

Hello everyone and welcome to the latest episode of the Modern Brewer Podcast with me, your host Chris Lewington. Well in this shortened episode of the Modern Brewer Podcast we are going to go through some of the key stories and trends of 2024 and I'm going to give some predictions for what I think the craft brewing industry is going to be like at the end of 2025. Well 2024 has been some year for the UK craft brewing scene and beyond. No doubt it's been marked with a little bit of doom and gloom. but I'm gonna definitely find some positivity in all of this as well. I mean, we can't really start anywhere else other than The amount of breweries that have closed this year. And there were some big names. Some, it's quite surprising, maybe some slightly less. one that definitely hit me when I saw it, and was one of those no way moments, was, Gypsy Hill. I mean, friends of the podcast, I know, I know the team there and Sam there quite well. yeah, it was a, that was a bit of a shock for me. that they were, luckily they didn't close, of course, they were acquired by, Sunrise Alliance Beverages, for five million pounds. for those who aren't familiar with Sunrise Alliance Beverages, they also own Curious Brewery, Wild Beer, Portobello, and St. Peter's as well. what was quite interesting on this news story was Previously, I think it was in 2022, they had raised, Gypsy Hill had raised 880, 000 pounds in crowdfunding, which valued the company at nearly 21 million. and that's despite financial losses by 2023 that accumulated over 7 million pounds since it started with reported losses of 1. 3 million in 2023 alone. So the real valuation that Sunrise Alliance Beverages gave was 5 million pounds, which probably highlights the true value of the brewery. Now, Where it became interesting was it was a little bit of public outcry on the on the crowdfunding. I mean, there's no doubt the crowdfunding comes with risks, you know, when you invest, but you were buying a brewery based on a 21 million pound valuation that was a year later worth five. And I think that caused quite a bit of upset. And there's always a little bit of a narrative about breweries overusing crowdfunding and kind of relying on the goodwill of people and the community around them to fund. What could just be a poor business in the back end? I'm not saying that necessarily about Gypsy Hill because I don't understand the true financials, of course. But I can see why there would be some outcry. I mean, a similar thing happened with, with Wild Beer as well. and it, I saw a good amount of chatter about when it's right and when it's wrong to crowdfund. I thought it's quite an interesting side narrative that came out of it. But what was really good news is that the brewery is not closed and the brand is still going. All the brewers, and all the team is still keeping their jobs and working there, which is great 'cause we all know the market conditions are not great for brewers seeking work, especially in London at the moment. as we'll find out in a couple of the others. and of course, like anyone associated with Sunrise Alliance is gonna be pretty happy. Gypsy Hills is a huge brand. it's definitely a big London brand you see in a lot of places. And the beer is excellent, so, you know, a really good string to their bow, so to speak. It's going to be really interesting to me to see next year how the market sort of reacts to that acquisition. I mean I've been a part of a brewery that sold to a much larger brewery and the public outcry was pretty substantial, but sales ultimately kept on growing and it's going to be interesting to see with a brand like Gypsy Hill how that acquisition really, you know, how that's taken by the market, and will those crowdfunding investors ever see their money back. They did say that by 2028 they will look to pay them back For those who invested but that would relies on a profit margin or sorry a profit total which yeah has to be has to be made first But I think What would be the bigger question for me personally is how long or if Gypsy Hill Brewery will be consolidated into one of their other breweries in their portfolio You see that so often and we're going to talk about one of the major ones later on. But yeah, I mean across the board whenever there's consolidation Of brewery brands generally that means production gets consolidated to one site at some point So it'd be interesting to see how that pans out because obviously that will affect a lot of the positivity that I felt around this You know people saving their jobs, etc So that's going to be a really interesting development one to keep the eye on in 20 25 and probably beyond most likely. The other one was really sad as well as a wildcard brewery. One of the OGs really, closed after 12 years of operation. citing the classic cost of living crisis and COVID 19 aftermath. yeah, it was, really sad to see one of those go. I know a bunch of the brewers there as well. You know, it's really local to where I actually live. So yeah, Everyone knows the market conditions have changed substantially. COVID was big, especially if you took on a lot of debt during COVID, interest rates then go up with the cost of living. And those two things really do double down to be quite difficult. And those brewers who took on, debt, it's just, it's so tough. especially when the market is, As we'll see it's not necessarily bad. It's just different and it's not growing exponentially like it once was there's also a lot more there was a lot more breweries competing for less space. So That's really where that kind of comes from. But yeah, really sad to see that one and then the other one four pure brewery down in birmingham one of the best One of the big ones, in London, in terms of London brewery capacity was Consolidated up to Magic Rock. Just as I was saying before, this was less of a surprise to me. I know that it's a big unit down there that got a lot of expensive equipment and ultimately there's a brewery up north that's probably a lot cheaper to run. And that's the sad thing with the acquisitions and the mergers is that this does become a balance sheet, this does become a numbers game and that sort of The romantic side of craft brewing definitely gets eroded. you know, these are big funded companies who are ruthlessly business orientated. So it makes perfect sense for them to be consolidating left, right and center. That's, in their eyes, that's the correct way of doing it. so yeah, really interesting to see how, what actually is going to happen to that equipment, what happens to that brewery brand as well. They did actually report sales increase of 42 percent year on year. So it's no under illusion that the brand is actually not dying, so to speak, but it's just that they couldn't seem to make the money, difficult, especially here in London, where everything is exponentially, famously more expensive. But I did want to spend a little bit of time because I hear so much of this doom and gloom. And quite frankly, At the start of the year, I used to bite a little bit, especially on social media, because I found like, there was a lot of narratives that were just a bit false. especially when you dug into some of the SIBA reports, actually the net closing of breweries wasn't quite as bad as it was being made to seem. So, I've always been quite, You know positive about it, but when the big names have gone this year It's obviously impossible to ignore and say that everything's fine so I did do a little digging and digging into the seba report so of the start of 2024 there was 1815 active breweries and by the end there was 1721 which means there was a net closure so including openings So net closure of breweries of 94, which is about a 5 percent decrease in breweries over the year. So that is pretty big. The hardest hit regions were the Northwest and the Northeast, and all citing very similar things to, wild card, which is rising costs, you know, debt taken on from CO from COVID. So. There's no question that there has been a, it is a difficult year for the brewing industry. But it's just a part of the journey for sure. if you look at any, as you see, anyone who knows me and has listened to the podcast regularly knows that I'm like big on economics and I studied it. And this is no different to any of the market that's basically ever existed. So this is like not something that's really bespoke to the brewing industry. And it's not something that's like going to be a huge problem. It's just, as a industry, as the craft beer industry saw such exponential growth in like the 2010s. It was exponential. It was ludicrous. And that starts to plateau, which is exactly where it's at now. there were a couple of big market shocks, of course, COVID obviously dipped into everything cost of living. but actually some really positive statistics coming out as the average annual production by SIBA members, the second for the SIBA report, of course is up 14 percent and is higher. Than the 2018 and 2019 levels So it goes to show that actually annual production is rising in breweries, which is genuinely a really good thing especially as it's going to be coupled with a lot better financial control and financial sustainability, which was absolutely lacking In those glory growth days. I think anyone who's been a part of a brewery will know that, margins and cost saving exercises whilst import maybe have been important were always second to volume and volume has always been the key and that's changing and probably for the best. So I think that's a really, really good and positive news that the breweries are increasing their production. And also if you want to look at this from a, from an economic point of view as well, not only a production levels increasing, but now in theory, your competition is reducing. So there's actually now 5 percent less breweries competing where they were last year. it's not necessarily how we'd like to look at our market. And I know that that's not something that, is really a positive, but ultimately if you were to try spin it as something that was good, I mean, at least there is now less bruise can be to me, the market should stabilize. And I, I do, we'll come into that, but I do think there will be a good stabilization of, of breweries, especially as people change the way that they operate their business. Some of the other takeaways from this, report, actually. It's a really good report if anyone wants to check it out. I'll link it in my, show notes, because I think it's great. and it's really nice to see, You know just nice to see some statistics quite hard to come by an iron street because the data is so sporadic if it even Exists, so it's quite cool to see it They were saying that in the CBER report of 56 percent of independent brewers, which is yeah, not craft brewers Sorry independent brewers now offer craft lagers, so that's definitely been a big trend, over the last couple of years is that everyone's been incorporating a lager into their profile. and then of course the big one, the one that everyone's really talking about in terms of beer styles that are growing is that non alcoholic beer, category. I feel like no and low get lumped together and I think they probably shouldn't because I think they're two very, very different products. But, The non alcoholic beer category is growing, no doubt. I, I do see that, you've got to be careful with percentages in this world, because it's based off watt. So, if they only sold 100 litres, and then they sold 200 litres next year, the percentage increase is huge, 100%. But, it's not really a significant volume. And what I'm waiting for is when I see Non alcoholic beer on taps, commonly drank in pubs. I do see it drank way more than I ever did in pubs. But I think if you were to go and ask any pub owner, what's their sales split of non alcoholic to alcoholic drinks, we're talking half a percent, maybe less of their total sales. So when that starts to creep up, that's when that market is going to start really, really growing. So it's a really interesting one and something we're gonna, I'm gonna Talk about in my predictions for next year because there's also With that exponential growth that's happening now. It's also coming in with its own problems So for me like the takeaways from this financial stability has been a really important topic in 2024 I would say it's almost critical there are Going to probably be some more acquisitions, but not in the same way that we have seen in the past Like five years ago where breweries were being bought for big sums of money because of their market potential There's gonna be more of this Sort of hawking of breweries when they're when they're on the when on the ropes That's what I think will be happening more of we'll see more I would be surprised if we see any brewery sales in the same way We saw them five years ago next year, but I don't think that's a problem either I think it's it just means business is gonna be run very differently Which I think is probably a good thing and definitely good for the sustainability of our brewery financially, and environmentally actually as well. I think it's going to be interesting to see how crowdfunding, takes a hit from this. There has been a couple of big high profile cases now crowdfunded ending very unhappily. And I wonder how many breweries are going to be going down that route in the future. It'd be interesting to see. It's tough to make a prediction on that. It's always been such a reliable source of income for so many breweries. but it's also been, I wouldn't say misused, but I feel like investors feel misled and there are good reasons for that in some cases as well. But now we are going to talk about something that's way more exciting. I think it's finally time to say that cask beer is back. Did it ever leave? Of course. But productions are increasing in breweries. It's 10 percent year on year rise in cask beer volumes. And there's a 14 percent overall increase in beer production. So, that's coupling up. The growth of Cask is accelerating the growth of, beer sales within craft breweries or, sorry, independent breweries now. as well, which is, making a return to better than pre post, pre pandemic levels. So, there is loads to be excited about. Cask Beer is such a heritage product for us. It's really, really important and it's so great to see it coming back. The race to the bottom of the price of a cask seemingly is, isn't there as it was once before. So breweries are seeing the opportunity in it now. It's also really quick to make. You can make a cask beer in seven days. You don't need half the cut, don't need half the ingredients or the processes. So I think there's a really, really good opportunity here for cask beer to keep on growing. And I think it's just so exciting as a massive, massive fan of Cask Beer myself. I know that I've definitely been seeing a better variety, better quality Cask Beer coming out recently as well. another statistic I have here is Cask Beer's share of total beer. Volumes brewed by SIBA members grew from 53 percent to 63 percent over the year, indicating that 10 percent increase. So that's so exciting. It's going to be always challenging to get cask beer to be as popular as keg beer, or getting it close. We all know the problems with cask beer, both on the quality side, that happens in the brewery as much as it happens anywhere else. But also, of course, in the cellars of the breweries, of the pubs that they're being sold at. But then, it's also the wastage aspect of it. And That is pro in my eyes, that's the biggest problem with cask beer And that's why there was that race to the bottom almost but pubs were like, okay I will spend you know 50 quid on a nine gallon of beer because I know I'm gonna have to throw 30 percent of it away or most likely which is Just crazy Or they'll just keep it on until the beer is so bad as an undrinkable and then everyone's having a bad experience having a pint of Seven day old cast beer which is totally gross. So Great I felt like there's still some things to overcome. I, I heard a really interesting concept at, I can't remember which trade so, and I can't, I really apologize to whoever it was who told me, because I can't remember who told me this either, because I remember sort of rejecting it a little bit at first, and I've been thinking about it for ages, but they, they've been, basically, know, or they were the brewery, There was, they would condition the cask beer in the brewery for the quality, get the quality to be as you would drink it in the pub, and then they would rack and dispense it out of key kegs or similar style kegs rather than putting it in the cask. so the beer remains noncarbonated, but also an oxygenated by the cellar air. So you can also now dispense this out of a Cask Beer, cask line as well. so these have these little improvements that actually could be quite interesting for Cask Beer. I mean, I can't vouch for this method. I haven't seen it and I haven't tasted a beer. I don't think that's come out of this. So maybe it's not going to do it true to style, but is this the The modern approach to Cask Beer packaging Because the ultimate hold back for me in Cask Beer is both the seller management and the wastage and if that could be solved Cask Beer has a real opportunity to come back even stronger next year Okay, let's look at 2025. And these are my three predictions for 2025. Number one, and it's a little boring, I do warn you, but the financial sustainability will be the number one most important topic in craft brewing by the end of 2025. It already is very high up, but I feel like financial sustainability will become more talked about than even environmental sustainability. I'm going to circle right back to the very start of this podcast, where we talked about the brewery closures, the feeling of this doom and gloom, but ultimately how craft breweries are learning to adapt and survive to a new market. Breweries will continue to close. That is a still a part of this cycle, but previously where breweries were volume chasing and revenue hunting, I feel like they're now looking at Margins and financial sustainability is the key to their survival rather than just exponential growth. Number two, I predict that in 2025 there needs to be some regulation on no alcohol production. Both from a microbiological standpoint and from an ABV standpoint, I have seen, heard, and actually read reports of some pretty big horror stories within the non alcoholic category. There are breweries who are pumping out beer that's well over 0. 5 percent, even though it's advertised as 0. 5 percent. There is a bunch of microbial issues that can come with packaging and brewing non alcoholic beer. There's some questionable understanding. Of stabilization versus sterilization and all of this is leading to some really, really scary products on the market. In my opinion. There is a lot of exploding cans. There is a lot of beer at over 0.5% and they are, there is genuine danger to people's health. You know, e coli can exist. In these 0. 5 percent less and less beers. These are things that we never have to worry about as brewers. Cause we always have the protection of alcohol. And right now there is absolutely no regulation on any of this. I can make a beer at 1 percent and sell it for 0. 5 because no one's checking. And there are people who are regularly doing this. And I feel that that's going to be something that we need to solve as a brewing industry in 2025. Do I think there will be regulation in 2025? I can't say. It's down to the government and they probably have bigger fish to fry this year. But I'm saying that we should and we need some form of regulation. Whether that comes from internally, from within our own industry, where we send things off and we have a report or we have a way of verifying that what we're doing isn't damaging people's health and aren't giving beers at over 0. 5 percent. Labeled as 0. 5 percent to the greater public because I think it's in all of our best interest to make sure that doesn't happen. Number three on my list Is the localization of the craft brewing industry. Is the time of a brewery becoming the hub of the community coming back around? This is exactly how brewing has been surviving for 5, 000 years by being essential parts of the community. Have we lost some of that over the last 10 years? As a lot of breweries have seeked growth, supermarket contracts, wholesale agreements. Have we lost that sense of community within the brewing industry and our connection to the local community? Maybe. I think we probably have, but actually what we have forgotten is how much defensibility that local community gives you. I will say this again, the brewing industry has been going around for 5, 000 years, essentially because it's always been a part of the local community. beer, when drank in moderation, is an essential part of socialization in this country. And we need to combine focusing on the community and margins to really maximize breweries long term sustainability. I predict that more breweries this year will be working on community projects, collaborating with local businesses rather than national brewers, local artists, having more tap rooms. building a community events around those tap rooms in order to build that defensibility and regrow that connection with the local community. And that's everything for this episode. The next episode will be going back to the usual full length format, and it's a doozy. I have the iconic Luca Lorenzoni, former MD of Camden Brewery and ex CEO of Northern Monk Brewery. For those that read his three piece article in the Brewer's Journal last year titled The Future of Craft Beer will Note the Insane Levels of Knowledge that He Has to Share. For me, that was one of the best written three articles I've read in a long time. There was so much value given in there. I really, really, really enjoyed them. I can't wait to bring you Luca's point of view on what we're going to talk about in the next episode.. I also can't wait to bring another year of podcasts to the listeners of the modern broadcast. Thank you to everyone. He's listened to a single minute of this over the last year. 2024 was great on a personal level for the podcast, and I can't wait to see how 2025 is. And this time next year, I'll be sat in the same place, hopefully saying how just how right I was with all my predictions. enjoy the rest of your festive period. And I can't wait to catch up with you on the next episode of the Modern Brewer Podcast.