We have become so used to hearing the term “headwinds” bandied about in business commentaries for the past three years that an increasingly dicey reality has become almost a cliché. Even more explicit references to rising costs, the commodity crunch, or the cost of living crisis have run the risk of sloganeering. But now the reality is biting and biting all of us. What used to be a topic for the silly season in the past – the CO2 shortage during the summer which threatened beer production – has progressed from a concern to a fact. Several German breweries have stopped the production of soft drinks and sparkling water, others have ceased brewing beer altogether. And this is just for starters. Those who thought that the covid pandemic was a big disaster will have to think again – and come up with ideas quickly or the current energy crisis in Europe could turn into an economic meltdown.

BrewDog shutters six bars in UK amid spiralling costs. Writing in a LinkedIn post on 1 September, founder James Watt said it was “heart-breaking” to lose three pubs in Scotland and another three in London.

A bombshell survey in August revealed that 70 percent of pubs are “unlikely to survive the winter”. UK Hospitality, an industry body, fears that 10,000 pubs, restaurants and hotels could go out of business in the next 18 months.

Responding to the cries for help, incoming Prime Minister Liz Truss said on 6 September that her government is finalising plans for a GBP 40 billion (USD 46 billion) support package to lower energy bills for UK businesses for six months.

Despite the six closures, BrewDog, on 18 August, opened its largest-ever pub in London’s Waterloo station, which Mr Watt stated received over 20,000 visitors in the first two weeks alone. The 26,500 sqft (2,322 sqm) bar, set over two expansive floors with a spiralling slide between the two, sports ping pong tables, a podcast studio, a co-working area and “Zoom rooms”, as well as a duckpin bowling alley, a not-for-profit florist and a secret cocktail hideaway. It can hold 1,775 people at a time.

Is there a San Diego curse going round? After brewers Ballast Point, Saint Archer, Modern Times, Green Flash, Alpine and Stone faced major problems and sold themselves, Mikkeller announced in August that it will close its brewery, blaming two years of Covid and rising costs. About half of Mikkeller’s US employees – 25 – will be laid off. Mikkeller is seeking an immediate sale of its brewery and warehouse. Reportedly, Mikkeller produced some 10,500 barrels beer in 2021, down from a high of nearly 12,000 barrels in 2019. Its beers for the US market will now be supplied through a contract brewing agreement with AleSmith, also from San Diego.

The website goodbeerhunting.com argues that Mikkeller took the emergency exit as it is in dire need of cash. The website says that in December 2021 already, the New York-based private equity firm Orkila Capital had to inject USD 6.1 million into Mikkeller to tie it over this year. In 2020, Orkila had invested USD 15.2 million, increasing the fund’s ownership stake in Mikkeller to between 30 percent and 50 percent.

Stone completes USD 165 million sale to Japan’s Sapporo. The sale was announced in June. Stone’s well-known founders Greg Koch and Steve Wagner are no longer in the picture. But little else has changed, at least for now. There were no layoffs among Stone’s 670 employees. Maria Stipp, CEO of Stone, and Kenny Sadai, Chairman of Sapporo USA, will lead the combined company, together with one other Sapporo executive. They will oversee the Sapporo, Stone, Anchor and Unibroue brands in the United States.

With the acquisition, beer production at Stone’s breweries is forecast to roughly double, as Sapporo begins migrating its beers to Stone’s breweries in Richmond, Virginia, and Escondido, San Diego. Sapporo could invest as much as USD 40 million in Richmond, and up to USD 20 million in Escondido.

Apart from the two production breweries, Sapporo acquired Stone’s bistro restaurants and brewpubs. It did not acquire Stone’s distribution unit. It remains with Stone’s former owners and financial backers. As the website sandiegouniontribune.com has learnt, they could earn undisclosed additional payouts from the sale, depending on how well the business performs.

This year, Stone expects to make 410,000 barrels of Stone-brand beers at the two production breweries. They have been running under capacity for the past few years amid flat or declining sales.

Royal Unibrew acquires Toronto’s Amsterdam Brewery. Same strategy, different targets. After Japan’s Sapporo snapped up US craft brewer Stone to localise the production of its own brands, Denmark’s beer and beverage producer, Royal Unibrew sought to overcome supply chain glitches by establishing a foothold in North America. In July, it agreed to buy 100 percent of Amsterdam Brewery, which is one of Toronto’s oldest and independently-owned craft breweries, founded in 1986. Royal Unibrew said it plans to produce some of its own brands at Amsterdam, both for Canada and for export to the key US market.

The deal valued Amsterdam at CAD 44 million (USD 33 million) on a debt free basis. Amsterdam Brewery has around CAD 34 million (USD 25 million) in revenue and CAD 5 million (USD 3.8 million) in EBITDA. Royal Unibrew is acquiring Amsterdam’s two brewpubs and its production brewery in the city’s Leaside neighbourhood.

Amsterdam must have been glad for the exit opportunity. The pandemic would have wiped out its profitable draught beer sales.

What is going on at TRU Colors, a Wilmington, North Carolina-based brewery, renowned for its mission to end gang violence by employing active, rival gang members? Only in July had its founder, George Taylor, bid USD 20 million for San Diego’s struggling craft brewer Modern Times. And on 9 September he closed TRU Colors’ doors. TRU Colors’ founder and CEO cited a loss of investor funding and negative media coverage as some of the primary challenges, which the brewery faced and, ultimately, could not overcome.

The “negative media coverage” probably refers to an article in The New Yorker, a national magazine, published on 28 August, which examines the brewery and its mission. It focuses on an incident at the house of the founder’s son, George Taylor III, in July 2021, when two people were shot and killed. One of the victims was employed at TRU Colors and Mr Taylor III served as the company’s chief operations officer.

Blaming bad press appears to avoid the real issues behind TRU Colors’ failure. Because if you read the various threads on reddit.com, to which Wilmington residents contributed, two different narratives emerge. One reads: good intentions meet a terrible business plan with predictable results. Alternatively: founder sets up investor farming scam, which treats gang members as exotic, dangerous mascots and markets the whole thing as a plucky craft brewery start-up with a dream.

Mr Taylor probably had to pull the plug on TRU Colors, after reading in The New Yorker piece that Molson Coors, which had bought a minority stake in spring 2021, was not looking to buy the business. A profitable exit at this point seemed therefore out of the question.

Succumbing to wokery, as some see it, the Australian craft brewer Colonial has changed its name, following two years of pressure amid claims it “glorifies and glamorises the colonial process”. As of 7 September, it calls itself CBCo. The independent craft brewer CBCo began production in Western Australia’s Margaret River region in 2004, before expanding to a second location in Port Melbourne in 2015. Its sells some 40,000 hl beer, which makes it one of Australia’s major craft breweries. After a recent investment of some AUD 12 million (USD 8 million) in upgrades to its Port Melbourne brewery, its brewing capacity has doubled to 80,000 hl.

In 2020, Colonial’s products were dropped by some liquor stores, which felt that the beer company’s name romanticises Australian history.

The rebranding still split the nation. Some thought the name change only represented a minor shift from the original. Others blasted the brewery for becoming the latest victim of “cancel culture”.

London craft brewer Beavertown sells up fully to Heineken. In early September, Heineken bought the 51 percent of craft brewer Beavertown it did not already own, for an undisclosed sum. The deal likely netted its founder Logan Plant, the son of the Led Zeppelin frontman, Robert, tens of millions of pounds.

The Dutch brewer acquired a minority stake in Beavertown in 2018. The GBP 40 million (USD 46 million) proceeds were mainly used to fund expansion, including the construction of a new brewery in Enfield, London, with some money ending up in Mr Plant’s pockets.

Thanks to Heineken’s cash injection, Beavertown’s sales have since almost tripled: from GBP 12.7 million in 2018 to GBP 35 million (USD 40 million) in 2020, the last year before sales were affected by the pandemic.

Beavertown’s growth has been underpinned by its increased production capacity and a partnership with the football club Tottenham Hotspur, including an on-site brewery at the stadium which can serve more than 60,000 people at every match.

Another tough year for Italy’s craft brewers. Galloping prices for energy, bottles, and CO2, as well as the erosion of consumers’ purchasing power: if the recovery of tourism has supported beer consumption up until now, the end of summer will be the real test.

Covid restrictions and dwindling numbers of tourists have hit Italy’s brewing industry hard. Although tourism rebounded in 2021, beer consumption in Italy still lagged pre-pandemic levels: 20.8 million hl (2021) over 21.2 million hl (2019), according to industry body Assobirra. Catching up depends largely on the on-premise, which has seen its share of consumption drop over the years.

Consumers pivoting to buying their beers in supermarkets seems to have largely benefitted the country’s Big Brewers. The market continues to be led by Heineken with a market share of 34 percent, followed by Peroni (Asahi) with 17.3 percent, and AB-InBev (mostly imports) with 9.5 percent.

The situation for craft brewers is far from rosy. The number of craft breweries crept up to 814 in 2021, from 756 in 2020, but this is a far cry from its peak of 943 in 2016, when Big Brewers took note of this booming sector and several Italian craft brewers changed hands. But craft brewers’ sales volumes have hovered around 450,000 hl annually, capturing a market share of only 3 percent.