The Australian craft beer industry has faced significant challenges since the high times before and during COVID-19.

In the first half of 2023, 35 Australian craft breweries went out of business, nearly matching the total for 2022. This article explores the problems craft brewers face and how PencilPay can help them.

The Boom During COVID

Before the pandemic, the craft beer industry was thriving. By 2021, there were between 350 and 700 independent breweries in Australia.

The pandemic initially boosted the industry as people, supported by government handouts like JobKeeper and JobSeeker, bought a lot of craft beer. Lockdowns led people to seek unique and experimental brews to break the monotony.

However, this growth period didn’t last. Many breweries expanded their operations during this time without anticipating the problems that would come after COVID.

The Post-COVID Problems: Inflation and Cost-of-Living Crisis

After the government handouts stopped, the craft beer market started to struggle. People spent less on craft beer while the costs of goods, transport, and shipping went up.

Fewer people visited bars and breweries compared to pre-COVID times, which hurt sales. Rising interest rates also reduced people’s disposable income, making them switch from craft beer to cheaper mainstream options or homebrewing.

This combination of higher costs, market saturation, overexpansion, and changing consumer preferences led to many brewery closures.

The Outlook for Craft Breweries

The closures result from a mix of higher input costs, market saturation, overexpansion, niche products, declining consumer demand, and reduced disposable incomes. While inflation might ease over the next year or two, the golden age of craft beer in Australia seems to be over.

To survive, craft breweries need to build strong brands, create engaging taproom experiences, and produce high-quality, consistent beers. They should also consider diversifying into growing categories like ginger beers, RTDs, and seltzers, and focus on local markets.

How PencilPay Can Help Craft Breweries

Despite these challenges, PencilPay offers several solutions to help craft breweries streamline their operations and improve financial stability:

1. Onboard Customers with Online Credit Applications PencilPay provides digital credit application forms that verify customers using company data. These forms also allow suppliers to store a payment method on file, offering security over the stock provided. This reduces the risk of bad debts.
   
   
2. Automated Accounts Receivable Management PencilPay automates the accounts receivable process, including sending payment reminders and processing payments. This ensures invoices are paid on time, reducing the burden on administrative staff and improving efficiency.
   
   
3. Custom Payment Plans for Struggling Customers During tough times, some customers may struggle to make timely payments. PencilPay allows suppliers to set up custom payment plans, bundling overdue invoices or creating payment schedules that match the customer’s cash flow. This helps maintain customer relationships while ensuring payments are collected.

Conclusion

The past few years have been tough for the Australian craft beer industry. However, with the right strategies and tools like PencilPay, craft breweries can navigate these challenges, streamline their operations, and build a sustainable future. By focusing on quality, consistency, and local markets, while using innovative payment solutions, breweries can weather the storm and come out stronger.