What is key to future growth in the craft beer industry?

According to new research from Northumbria University, the COVID-19 pandemic has an impact on UK breweries however, going forward, location and innovation are key factors that will shape strategies for future growth in the craft beer sector.

The study found that, since 2020, over 200 breweries across the UK were forced to shut. However, the research findings have suggested that despite the challenges, the pandemic has “provided opportunities for some to reinvent their businesses”.

Looking at a study published in Regional Studies, the researchers found that UK craft breweries “adapted and responded to the pandemic crisis”, with location shaping breweries’ strategies for the present day.

The University study found that, during the pandemic, urban breweries were “more effective in capturing support provided by the Government and in adapting to changes required by lockdowns and restriction to movements”. This was highlighted in the way they moved from packaging with casks and kegs to cans and bottles.

Researchers found that, overall, rural breweries felt the impact of crisis “much more” compared to breweries located in towns and cities. This was due to their demand being concentrated in reduced catchment areas and smaller networks supplying aid at a local level.

“Being located in an urban or rural area made a difference for breweries during the height of the pandemic,” Professor Ignazio Cabras, Research Lead from Northumbria University’s Newcastle Business School.

“While our research demonstrated the cruciality of financial support provided by the Government to breweries during lockdowns and movement limitations, support by local people and other local businesses were equally significant factors in how craft brewers, in the absence of pubs being open to supply products to, survived the crisis.”

What’s more the researchers argued that if communities don’t support their local businesses such as breweries, then they “will face closure”.

“The pandemic had a big impact on not only breweries, but supply chains both big and small. We are still feeling these impacts today, with one third of the hospitality industry predicted to be under threat of failure at the beginning of this year,” Dr Gary Bosworth, Professor of Rural Entrepreneurship at Northumbria.

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“What surprised us most was just how many strategies these brewers discovered to strengthen their resilience in the face of unprecedented challenges.”

Bosworth highlighted that “it wasn’t changing business strategy that put businesses on the right foot to move forward in the initial stages of the crisis,” rather the “individual attitudes to the pandemic such as those who felt the crisis would pass were less likely to make investments during the period, and slower to innovate.”

In addition, the researchers cited innovation as a key to future success for the sector, such as “taking risks, embracing creativity and being innovative”.

Using a study from the International Journal of Entrepreneurial Behaviour & Research, the study found that individual resilience “must come ahead of evolving company strategy, in order for small businesses to face the challenges of unexpected events”.

“COVID-19 changed perspectives for craft breweries. Before the crisis, for instance, craft breweries tended to brew a much wider range of beers, however now many refocused their efforts on core and flagship beers, cutting seasonal beers to achieve economies of scales,” said Dr Ekaterina Shakina, Assistant Professor at Newcastle Business School.

“Compared to pre-COVID-19 times, much investment has been also re-directed from capital infrastructure to marketing and social media, to maintain and keep up with the customers base acquired during the pandemic.”

Strategies that could be adopted in the future include offering free same day local delivery and collaborating with local beer venues for ‘tap takeovers’.

“As a brand new start-up we launched our first batch of beer right as the pandemic hit, which had its positives and negatives,” said Ben Cleary, Founder of Full Circle Brew Co, based in Newcastle, England.

“Community engagement was a key driver for us. In the early days of the pandemic, with many people furloughed and unable to go anywhere we put on online tasting sessions.”

“Supporting communities both locally and further afield remains as important to us as we move to a post-COVID economy. Using the brewery as a force for good has helped us to establish our business through a really difficult time.”

Looking to the future, the researchers have said that further studies are needed to understand the full extent of how impactful individual resilience is to achieve whole company resilience.