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The closure of a craft brewery on the New South Wales' Mid North Coast is reflective of financial struggles felt across the sector, the industry's peak body says.
Key points:
- A craft brewery at Port Macquarie has closed, amid increasing financial pressures
- The peak body for the craft beer industry says the closure reflects hardship across the sector
- Inflation and the rising cost of materials are among the pressures being faced by breweries
Wicked Elf brewery, based at Port Macquarie, is closing after 16 years in operation, citing increased operational costs and a decline in sales.
The brewery's general manager and head brewer, Dan Fardon, said the business was becoming less sustainable, with costs such as electricity now higher than rent.
"It's just an economic decision really. It's not sustainable and as sales are slowing I can only see that situation getting worse," he said.
Mr Fardon said he believed craft beer was also becoming a luxury good for consumers.
"I think you will find the other breweries in town are also going through some difficulties, and that would be nationwide I believe," he said.
"Craft beer is definitely a bit of a luxury, and if household budgets are getting tighter then it's probably one of the first things on the chopping block.
"I think everyone's feeling that."
Brewers nationwide feeling pressure
The Independent Brewers Association chief executive, Kylie Lethbridge, said it was sad to see a much-loved regional brewery close.
She said the association was bracing for more closures as brewers across the country struggle with rising costs.
Ms Lethbridge said some raw materials had increased by up by more than a third, including barley needed to make malt and hops.
"They're still being very hard hit by the increasing costs for materials and freight; in some instances materials have gone up by 37 per cent which is significant," she said.
"You add all the other things: energy costs, inflation on top of that. It's very difficult to do business."
Ms Lethbridge said brewers nationwide were heavily impacted during the COVID-19 pandemic.
"Particularly those with hospitality venues, they did it a little tougher," she said.
"We have experienced some relative joy at the thought we might be coming out of the end of that process, only to now have it appear that the situation is actually quite challenging again but in a different way, as inflation and other things are now impacting those breweries.
"Some of those that might have fallen back on cash reserves, or borrowed or found other means of survival during COVID, now don't have those options available to them."
Ms Lethbridge said there were likely to be other breweries forced to close their doors.
"The situation in some areas is not as dire as others, but definitely a large percentage of our members are experiencing some kind of hardship," she said.
"There's been a couple of quite large breweries that have recently gone into voluntary administration ... Ballistic Beer in Queensland being the first and Tribe Breweries in NSW being the second.
"There are definitely others that we know that are looking for ways not to go into voluntary administration … so there is a feeling there will be more sadly."