Beer Craft

Analysts predict post-Brexit boom for Britain’s craft brewers

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Craft brewers in the UK could benefit from the country leaving the European Union, says a bank.

The surprise Brexit vote will have “critical implications” for the beverage industry in the UK, Rabobank said in a report.

English drinks will be well placed to ride out the short-term fall in Sterling and longer term renegotiations of trade deals.

Meanwhile, in which foreign operations could be challenged if import tariffs were introduced.

“In the craft segment, British craft brewers would also benefit from the pound’s weakness,” Rabobank said. However, in the longer term, import tariffs would also be a bane, as the transaction effect of devaluation of the pound is limited.

Most barley and malt, which make up a small proportion of the cost price, are sourced domestically, and although raw material for packaging is often imported, most added value is created in the UK.

Rabobank also warned that the £71bn Megabrew deal between Anheuser-Busch InBev and British drinks giant SABMiller could have been affected by the leave vote.

“The value of SABMiller in British pounds will have gone up, as a large part of the company’s earnings are in foreign currencies. AB InBev could have benefited from the currency movement, but has hedged part of the purchase price. For the sellers of SAB, the depreciation of the British pound is bad news, as they could have hoped for a higher price today,” Rabobank said.

“The bid premium was, however, substantial, and sellers have the option to elect part payment in (restricted) ABI shares at a fixed ratio. In euros, ABI shares currently trade 20 percent higher than at the time of the bid.”

The bank said beverage industry players are likely to turn to shifting sourcing, M&A activity, shifting geography for production and moving their market focus.

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