The British craft brewing sector is getting decimated in the first quarter of 2026 and the situation doesn’t make pretty reading for the wider hospitality industry either.
At least the Scottish rugby team appears to be lifting its nation’s spirits – because its once heralded pair of indie beer powerhouses, BrewDog and Innis & Gunn, have already fallen by the wayside this year, and we’re not even halfway through March.
Both firms were the titans of challenger innovation, emerging out of the pre-crash boom of the mid-2000s to become two of the UK’s leading lights on the increasingly popular craft beer scene.
But the 2020s have brought decidedly choppier waters.
While each outfit has been bought out - with US firm Tilray picking up BrewDog, and C&C Group, Innis & Gunn - their bricks and mortar operations have been jettisoned and, crucially, over 600 people have now lost their jobs.
Although in an interview with our sister publication, The Grocer, Tilray CEO, Irwin Simon has claimed the redundancies of Brewdog’s 484 employees and the 38 bar closures had “nothing to with” them; and that the firm is exploring franchising opportunities which could see some of those bars reopen under new operators.
Supermassive Black Hole
Still, the UK hospitality sector is in dire straits, with bricks and mortar venues having much less appeal to investors than they did a decade ago.
With close to 3,000 permanent pub closures across the country since the start of 2020, it’s no secret that running pubs and bars has become a very difficult business; and Tilray and C&C will be far from willing to take on assets that are simply going to cost too much money to turn around.
“There is a plethora of available property assets, and a bulk-buy of expensive overhead-attracting assets would be a hard sell to achieve quickly,” Frances Coulson, partner and head of insolvency & restructuring at Wedlake Bell told Food Manufacture.
“Everyone sees pubs and restaurants closing and - in many areas - being converted to residential. These property assets were high overhead, having often been purchased in flagship locations.”
Pointing out the added impact of rising energy bills supply chain issues; Molly Monks, insolvency specialist at Parker Walsh added: “Bricks-and-mortar hospitality sites have become significantly harder to sell in recent years because operating costs have risen so sharply. Energy bills, business rates, wage increases and supply chain pressures have all squeezed margins for pubs and bars.
“As a result, many buyers are cautious about acquiring physical venues unless they are in exceptional locations or have very strong financial performance. In that context, it’s not surprising that buyers may be more interested in the brand, distribution and intellectual property than in the hospitality estate itself.”
Too much, too soon?
So why did BrewDog and Innis & Gunn begin to struggle so dramatically over the last few years?
The wider economic downturn didn’t help matters of course – but in BrewDog’s case, it would seem that an expansion-at-any-cost strategy fuelled by significant amounts of debt came home to roost quite spectacularly.
And when both co-founders decide to jump ship barely a year apart, the writing is very obviously on the wall.
It does beg the question why the firm thought it wise to expand to as many 100 venues globally, despite only possessing a relatively small share of the overall UK beer market (5%).
While accusations of self-inflated valuations might abound – we should spare a thought for the roughly 220,000 ‘Equity for Punks’ investors who raised £75 million across seven funding rounds from 2009 to 2021, and who now stand to lose all their investments.
“Ambitious debt-fuelled expansion plans seem to have run away with them, that coupled with the expensive properties previously mentioned,” said Coulson.
“Both brands were trying to break the hold of big breweries - be the new kids on the block - but in order to chase rapid growth, were taking on enormous, unsustainable overheads.”
Focusing on the complex and challenging market conditions faced by hospitality brands in the 2020s, Monks added: “Like many fast-growing brands, expansion can become difficult to sustain when market conditions change. Over the past few years the hospitality sector has faced a combination of rising costs, shifting consumer spending and more cautious investment environments.
“Rapid expansion strategies that may have worked during periods of strong growth can become harder to support when margins tighten. That doesn’t necessarily reflect the strength of the underlying brand, but it does highlight how quickly the operating environment for hospitality businesses has become more challenging.”
Green shoots of recovery?
Will Tilray and C&C Group be able to turn the respective brands around? It’s hard to say at this stage, but C&C certainly has the infrastructure and experience to return Innis & Gunn to success; benefitting in no small part from the brand’s smaller, more agile structure as opposed to the now-lumbering BrewDog.
For Tilray on the other hand, the situation is far more complex. Most of its expertise is in the cannabis and pharmaceuticals sectors. It’s American.
Both geographical and industrial distance separate it from BrewDog; and it has also chosen to keep on 11 of the brewer’s UK venues – which will add even more difficulties to the challenge.
“The brewing sector more broadly has also faced significant pressures, from cost inflation to weaker consumer spending and widely reported volume declines amongst the major brewers, alongside the on trade challenges specific to individual players”, explained Tom Swiers, head of food and beverage at Interpath in the UK.
“Scale is another issue within the craft segment. Even as a sizeable operator, BrewDog represented less than 5% of the UK beer market. Tilray and C&C bring that scale needed, and depending on their strategy for the respective brands, one hopes they will have the firepower to keep them alive as recognisable names within the UK beer landscape.”
Warning of the substantial costs required to turn around a brand like BrewDog, Coulson told Food Manufacture: “Tilray acquired BrewDog’s global brand, IP, UK brewing operations, and 11 top-performing pubs for £33 million, leaving behind the majority of the unprofitable bar arm and nearly 500 jobs. They can [now] focus on core strategy and managing overheads to achieve growth and stability. This will, however, require very substantial investment.
“Innis & Gunn can massively cut costs by integrating production and distribution efficiently and not being over ambitious in scale. Both brands (along with many others) will now have to deal with the global uncertainties and likely resulting costs rises and reduction in discretionary spend of their customer bases.”
Who knows what the future may bring – but both brands likely face a significantly tricky 2026.
