Is Now The Best Time to Grow Your Brewery?

Despite some political upheaval in the UK in recent years, the brewing sector is one area that has seemed to continue full steam ahead, with new operations popping up regularly, further enhancing the UK’s reputation as a maker of world leading beer.

A significant factor in the growth of the sector and the rise of new and innovative breweries is changing consumer behaviour. People want unique flavours and products that come from a manufacturer with a bit of a story, or brewers that are pushing the boundaries.

However, growth and success in the sector can also be attributed to new ways to access finance to launch a new business, as well as grants and incentives for start-ups and organisations under three years old. I want to set out a few of the most effective ways breweries can access finance and secure growth.

Crowdfunding: It’s here to stay

Once upon a time crowdfunding was viewed with suspicion and there were doubts about its success. But, within the brewing sector it has proved extremely successful in raising money time and time again. BrewDog was perhaps the most famous exponent of the peer-to-peer funding route and it recently returned to the people in a bid to raise £10m.

Due to the popularity of the brewery and the desire for people to get involved in exciting new projects in the space, the target was smashed, with the Scottish brewer raising £11.4m in just 90 days. The cash has been earmarked for a new brewery at its original site in Ellon, Aberdeenshire, to help keep up with demand in the UK and Europe. It will also be used to develop the company’s first sour beer facility.

Smaller breweries, such as Leeds-based Northern Monk, have also turned to crowdfunding to fund their next expansion. In just three hours, the brewery raised its £500,000 funding target, which has been earmarked for equipment and facilities to triple its capacity. An interesting aside is the investment coming from other breweries, with Hop Stuff Brewery making a significant contribution.

As crowdfunding is clearly here to stay, it is important to choose the correct platform for your goals. Some have an all-or-nothing funding model, which means if you do not reach your funding goal, you get nothing, while others enable you to keep the funding even if you do not reach your goal – making research vital before embarking on a crowdfunding campaign.

Funding opportunities

Of course, crowdfunding doesn’t necessarily work for every brewery looking to attract investment and expand. It could be that a small injection of cash is all that is required to take a business to the next level. If that’s the case then there are a wide range of options available through regional grants and investment funds.

The funding landscape has changed significantly in recent years and there’s a plethora of local and national initiatives and schemes developed with the aim of making access to funding easier for businesses.

Of particular interest to small businesses are the government incentives in operation across the UK, with local authorities operating grants, loans and business support initiatives to encourage the entrepreneurial spirit.

In Yorkshire alone, where the brewery sector is booming, additional regional funding is available for small businesses looking to establish themselves, as well as companies aiming to expand in their first three years. In Leeds, the Business Growth Fund and Resource Efficiency Fund provide grants of between £10,000 and £250,000 to SMEs and recently established companies operating in the Leeds City Region, providing a great opportunity for owners to quickly develop and expand their business.

Other options include the Northern Powerhouse Investment Fund, the LEP Loan and the Manufacturing Growth programme, all of which offer ways for breweries to reach their goals.

Of course, these kinds of incentives are not limited to Yorkshire. There are regional growth funds in place across the UK and it is certainly an avenue those in the brewing sector can explore.

Help is at hand

With the possibilities crowdfunding and the many and varied regional grants and incentives available, it’s safe to say that now is the best time to grow a brewery business and take it to the next level.

Whether that next level requires £10m of additional funding or if a small business loan will be enough to increase capacity, the current climate means anything is possible.

 

For further information, contact Matt Grant mgrant@garbutt-elliott.co.uk