Already struggling with “astronomical” input cost increases, independent brewers are set to face a further hike in their commercial water charges.
Despite the dramatic increases to their costs, independent brewers across Ireland are limited in their ability to pass them on to consumers, as they compete with far larger, commercial breweries.
The confirmation of a 9.8 per cent hike in water charges has brewers concerned amid the closures of several well-known, award-winning breweries across the country.
The most prominent of which, after a drawn-out examinership and dispute over the appointment of a liquidator, was Killarney Brewing and Distilling (KBD). Shutting its doors in July at a loss of more than 50 jobs left the surrounding community without an important employer and tourist attraction.
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In the days after the judgment, KBD’s management blamed “significant and sustained challenges” that impacted the business “stemming from the lasting effects of the Covid-19 pandemic, delays in opening our state-of-the-art distillery in Fossa, global supply chain disruptions, rising input costs, and ongoing geopolitical and trading pressures”.
[ Liquidator appointed over Killarney Brewing and DistillingOpens in new window ]
The brewery, which produced whiskey as well as a half-dozen types of beer and gin, felt the effects of US import tariffs on whiskey – having put significant emphasis on North American markets.
Roscommon’s Black Donkey announced it had ceased production the week prior after 11 years in business. The brewery’s cofounder, Richard Siberry, blamed Ireland’s “archaic and arcane alcohol licensing laws”, which leave small breweries “virtually prohibited” from selling directly to customers and struggling with margins about 17 per cent.
These closures are a symptom of the struggles of the industry generally, says Libby Carton, one half of Kinnegar Brewing in Letterkenny, Co Donegal, and the chair of the Independent Craft Brewers of Ireland (ICBI).
[ Kinnegar makes waves at World Beer Cup in MinneapolisOpens in new window ]
“For independent breweries, much like other independent businesses, the actual cost of doing business and the legislative burden simply have to be reduced.
“In the last couple of years, it has been legislative changes that have increased our input prices, and one of those is water,” Carton tells The Irish Times.
Non-domestic water charges are set to be increased by 9.8 per cent following a decision by the Commission for the Regulation of Utilities (CRU) in mid-July.
The new water and wastewater tariff rates will be effective from October 1st, with the CRU citing the need to “ensure the recovery of costs of water services” to aid “the reliability, efficiency and sustainability of water services”.
The decision was described as “yet another example of the relentless increases in operating costs that are eroding Irish competitiveness and undermining the viability of businesses”, by the Irish Hotels Federation at the time, and a similar feeling is held among breweries.
The current water charges for businesses, Carton says, are “simply unsustainable” and will drive breweries into the ground. “Breweries are going to go out of business.”
She said many of the legislative problems facing the sector are “not unique to brewing”, but that the planned increase in the cost of commercial water charges will disproportionately impact brewing.
“Water is our biggest raw material, as well as being a utility material in the brewing industry. We just we cannot sustain the increase in costs,” she says. “It seems completely unjustified that the cost of water should be going up at the rate that it is.”
The increase is part of a series of water charge hikes in recent years, says Seamus O’Hara of the Carlow Brewing Company. “Beer is 90 per cent water, it is an important input.”
One of the progenitors of craft beer in Ireland, O’Hara founded the brewery and the O’Hara’s brand in 1996 but warns that “people do not realise” how the increase will impact on beermakers.
Tom Cronin, founder and chief executive of the Rye River Brewing Company said that since 2014, when the minister for the environment assumed responsibility for water supply and waste water, businesses have seen significant cost increases.
[ ‘Year of change’ at Rye River Brewing sees losses rise despite jump in salesOpens in new window ]
“Over the past four years alone, businesses like Rye River Brewing Company have been levied with 110 per cent increases, eroding and undermining profitability and the viability of the business.
“Costs increases like these cannot be simply passed on to the consumer and while we continue to find sustainable savings through water management initiatives within the business, we cannot cover these annual increases.”
Water charges spiked late last year, and despite reducing its water usage and consumption significantly, Rye River says it has seen a €70,000 increase in water charges between 2024 and 2025.
The legislative issues for the sector are not limited to water, however. The implementation of the Deposit Return Scheme for cans and plastic bottles has presented a significant issue.
Kinnegar says it has been hit with a €16,000 cost annually as a result.
“That is nearly the same as half of a decent job in a brewery, it is simply an additional charge that has come out of nowhere,” Carton says, emphasising her support for the “general intent” of the initiative.
“We don’t think it is sustainable for small producers to bear the burden of cost. I would imagine that the people [working at Re-turn] are better paid than most brewers.”
[ Re-turn: The Deposit Return Scheme that could reshape IrelandOpens in new window ]
The sector barely escaped the impact of alcohol warning labels: “Happily, the alcohol labelling law has been deferred by two years to 2028,” she says, noting that it is a “huge relief” for her own business and for ICBI members.
Had the warning label legislation gone ahead, Kinnegar would have entirely stopped exporting canned products as it “simply would not be worth our while” to have two packaging streams, one with the warning and another without.
All of these extra costs and regulatory requirements were introduced as breweries were recovering from the skyrocketing inputs and the impact of Covid-19.
Lockdowns had a mixed impact on the sector, breweries that had built up a strong on-trade presence, in pubs and bars, suffered, but those that had broken into the retail market saw a “boost in retail demand”, O’Hara says.
“While the pubs were closed, that was a challenging time. The on-trade is where a lot of people interact with your beer for the first time.”
The Carlow Brewing Company was “severely impacted” by lockdowns in some of its key export markets, such as Germany, where the majority of its demand was for kegs, but was “much stronger in retail” domestically.
Unlike the whiskey sector, the craft beer industry is less exposed to the impact of tariffs, despite being an export-focused sector.
O’Hara’s Carlow Brewing Company has focused primarily on exports to France, Italy, Spain, Germany and Canada, with Irish sales accounting for about a third of its production as the domestic craft beer sector in Ireland has grown steadily.
Before the pandemic, the US was one of O’Hara’s 10 largest customers but even before tariffs the company was priced out of the market.
“There was a period in which the logistics, the costs of shipping containers to the US went up enormously. There were a few different challenges – long before the tariffs – that knocked the US back a bit.”
Costs had risen so much that shipping a low-margin product such as beer “just wasn’t economical”.
The impact of tariffs hasn’t been felt as hard in beer as it was in the whiskey industry due to the beer sector experiencing its peak sales to the US around St Patrick’s Day in March – just before Donald Trump’s April 2nd Liberation Day tariffs announcement.
While O’Hara says the sector is not anticipating a “massive impact” from tariffs, there is a risk of them becoming a problem nearing the end of the year and ahead of St Patrick’s Day in 2026.
The bigger issue for the sector is input costs, which O’Hara says have gone up “dramatically” with some of the Carlow Brewing Company’s costs “almost doubling”.
Across labour, energy and raw materials, “a lot of things have gone up by between 50 per cent and 100 per cent”, and the hits came just as businesses were getting back on their feet after the pandemic.
“Just when you’re getting out of one thing, suddenly that challenge comes down the tracks.”
Most of the glass bottle manufacturers used by Irish breweries were based in Russia, due to the low cost of energy. With the Russian invasion of Ukraine and the ensuing sanctions, brewers were an unlikely victim of circumstance.
“Bottling was moved to other countries where, at the same time, energy and energy costs were shooting up,” O’Hara says.
“The period of high inflation coming out of Covid was crucifying for us, it was really difficult. Our glass bottle costs went up astronomically because of the energy crisis – even the cost of cardboard cases went up,” Carton says.
Despite the “stark increases in cost”, Kinnegar did not pass on the increases to the consumer and had to “eat” the increased costs in its margins. In the past year, the sector “has regained a little bit of our margin, but very, very little” as the cost of glass bottles normalised.
Other costs have also seen “astronomical” increases, such as carbon dioxide, a component in beer brewing that Carton says “went up eight-fold during the energy crisis”.
While the price has reduced, it is still far above its pre-pandemic levels.
Some independent brands have been luckier. Rachel Byrne, one half of ginger beer brand Zingibeer, says the company has been “lucky” to be largely isolated from the worst cost increases in recent years.
[ The banker and the butcher who have given ginger beer a taste makeoverOpens in new window ]
Zingibeer has locked in a price per unit with its manufacturer, JJ’s Craft Brewing Company in Limerick, in recent months but is still feeling the impact of “massive” increases in the cost of core inputs to their product, sugar and glassware.
In the face of increases to its electrical costs, despite improving electrical efficiency by 15 per cent, Rye River signed a corporate power purchase agreement with renewable energy firm Pinergy.
This enabled the Celbridge-based brewery to power its entire operation using renewable energy sourced from Beale Hill wind farm in Listowel, Co Kerry.
While a lot of customers “will have experienced big increases at the retail end, whether for their pint or their bottle of beer” O’Hara says not all of the price increases have been passed on to consumers.
“All companies in this sector have had pressure on their margins, which obviously puts pressure on the business,” he says.
He says these measures have “made it quite challenging for the sector” and have led to a considerable shrinking of margins for brewers in an already low-margin, volume-based sector.
“Costs have gone up, but you can’t pass them [all] on to consumers,” he says, noting that were all of the increased costs passed on “people won’t be able to afford your product”.
With lower margins and a limit to the flexibility in price, companies must look to sell increased volumes of product, but challenges with market access and price competitiveness hamper that.
Carton explained that “for the most part”, craft beer “does not have to be more expensive than a macro beer [from the big breweries]”.
The difference in price between the product from a local brewery and a large multinational is “simply the pricing policy of a lot of outlets”.
“There has been a tradition that people are prepared to pay more for craft or independent beer, and certainly in the on-trade [pubs and bars], very often, the publicans are getting a much bigger margin on our beer than they are on the macro beers.”
The premium from the higher price, she explains, is not being seen by smaller breweries.
“We sell our beer at a price that should make it easily competitive” with larger beer brands, “and the attitude of a lot of publicans is ‘the consumer will pay more, so we are going to charge more’”.
The combination of these factors has created a business environment in which it is “incredibly difficult for a small brewery to survive”, Carton says. “It is difficult at every level for breweries.”
At the same time, she is optimistic for the future of the industry. “The sector is full of some really good breweries – and well-run businesses – [and] with any kind of fair chance at all we are going to continue to thrive and offer consumers the quality and the choice that the marketplace deserves.”
