New trade barriers were compounded by Covid and tax changes
Source: The Guardian https://www.theguardian.com/food/2023/aug/19/craft-beer-boom-uk-firms-bust-brexit
Kimi Karjalainen and his brother Marko poured their life savings into Bone Machine Brewing Co when it opened in Pocklington, East Yorkshire, in 2017 before moving to Hull, as part of the craft beer revolution that swept Britain.
“The entire investment, not including time and labour that we gave for free, was about £70,000,” Karjalainen said. Four weeks ago, it was gone. “That was my parents’ retirement.”
“It just got too much – Brexit,” Karjalainen said. “We were heavily geared for export. We’d be selling to Finland, Sweden, Norway, Ireland, Netherlands, Italy, Spain. We had Hungary in the pipeline. And it all disappeared with Brexit.”
Post-Brexit trading arrangements with European Union countries meant that Bone Machine’s craft beers needed to be accompanied by expensive and time-consuming paperwork.
“Everyone was saying ‘it’s too complicated to import anything from the UK any more’,” Karjalainen said. “In terms of pure output, that was about 30% to 40% of what we made. In terms of income, it was probably more than half.”
Bone Machine is one of more than 100 small brewers that have been forced out of business in the past 18 months, hit by a combination of Brexit, the pandemic and the cost of living crisis and now threatened by changes to beer duty laws. In June, the accountancy firm Mazars found that 45 small brewers had gone into liquidation, but many more have either been sold or swallowed by rivals.
Steve Dunkley, founder of the Manchester brewery and taproom Beer Nouveau, which shut last year, has been charting the closure of breweries since 2022 and identified 83 last year which had closed down, with a further 33 so far this year and four more under threat.
Brexit was not the only problem for Bone Machine. “Covid hit very hard,” Karjalainen said. “The final nail in the coffin was the cost of living crisis. Our production costs doubled and our customer base halved. So while people were getting worse off, the multinational brewers were going to pubs, to free houses, and saying ‘we’ll give you cheap kegs, but we want control of all your lines’.”
Karjalainen has found a job in sales for a different brewer but has given up on his life’s dream. “It cost a lot in mental health and physical health. I developed a blood clot. It’s not worth it. And I feel for all the staff. We employed five people and I saw them all last week. They were all in tears.”
The company is not in liquidation at this stage. The brewery facility is mothballed and Karjalainen is still hoping to find a buyer.
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