Too many brewers in Scotland?

Scotland's changing cask beer scene ​

1998: Ten to 12 brewers producing cask, including Scottish & Newcastle, Caledonian, Maclay and Belhaven, of which only Belhaven (part of Greene King) and Caledonian still have a cask offer. ​

2008: There are now said to be 42 breweries producing cask, or bottled variants of cask.​

The sudden collapse of the Isle of Arran brewery has caused shock waves in beer circles north of the border.

Some experienced players say more closures could be on the cards. If this happens it could be taken as evidence that what seemed to be Scotland's growing enthusiasm for cask has been swamped by increasing volumes of premium lager - Scots drinkers have infinite enthusiasm for lager - and cider over ice.

This, along with rocketing costs and the difficulties involved in getting national distribution, could, the more pessimistic trade observers suggest, stop the previously steady march of cask across Scotland in its tracks. And it's argued that oversupply will lead to further casualties.

Several brewers agree that over-reliance on bottled bulk supermarket deals is a high-risk strategy. It commits the brewer to large volumes in return for low margin, and the danger of a cash-flow crisis is always present.

In Isle of Arran's case relatively limited draught distribution meant there was little to fall back on when technical difficulties compromised off-trade volume targets. Costs were inevitably a factor too. A crowded market But are there simply too many breweries in Scotland?

John McGarva of the Tryst brewery near Falkirk points out there are now around 42 cask brewers in Scotland - from tiny but well-regarded outfits like Tryst to Belhaven/Greene King. A decade ago there were less than a third of that number.

"It's all very well to talk optimistically but there is no doubt we are facing tough times, very tough times indeed," he says.

"In a few months I've seen literally everything go up, hitting me with extra costs of around 10 per cent over a short period: it's going to be very hard work from now on."

Pam MacRuari, head brewer at the Isle of Skye Brewing Company, shares his caution, but is convinced demand for cask is now entrenched in core markets, and says the best breweries can hope to keep their momentum "if they're careful".

"But it doesn't help to have your brewery on an island," she continues. "Arran may be only a very short distance from the mainland but there's a whole extra transport cost to consider before you even start."

Skye, by contrast, is connected to the mainland by a road bridge. She adds: "In our case we've managed to gain distribution in the Highlands and on Skye where there was never any cask before, and those accounts are really important - some of them sell formidable volumes of our beer."

The island factor hasn't stopped brewers launching ventures on Islay, Colonsay and Shetland, but these enterprises generally aim to sell mainly to their own local market, which includes tourists.

Ambitious plans

And it didn't deter licensed trade entrepreneur Norman Sinclair from rescuing the Orkney and mainland Kinlochleven breweries when they went jointly into receivership in 2006 - and his development plans are for robust, national expansion. Sinclair says he knew what had gone wrong, and had been equally certain he could put it right.

He's dismayed by recent press reports of the Arran closure which, he fears, play up the idea that cask brewers generally are in crisis. "I've already turned down questions from one journalist on this, because I knew the line that was being pursued," he says.

"If everything is so bad why am I investing in new visitor facilities and other infrastructure, and making plans for expansion? "We have terrific beers here, and Orkney in particular is a brand you expect to see anywhere that values great beer. Yes, it can cost more for a premium product, but I don't want to go down the £49-a-cask route anyway - it's not what we're about."

No price problem

The demographic of the cask drinker means that customers aren't price-sensitive, he says. The market where Orkney's flagship Dark Island sells best can bear the cost - and the price differential may even help mark out a beer as different from the pack.

Jonny Delap, owner of Fyne Ales, based in rural Argyll, agrees. "Costs are severe, and inevitably the price has to be passed on to the customer - but the strength of really excellent product matters more than price," he says.

"We have a local hotel here where Fyne Ales outsell every other beer - and that speaks volumes. "At the same time, though, Arran's difficulties have shocked us, because the owners are part of our brewing family, and active in the Society of Independent Brewers."

His sales chief, Rob Jenner, says draught accounts are vital: "We have excellent distribution in key English markets, where we're steadily expanding. We aren't cheap - but people still want the beer, and that's the bottom line."

Filling a vacuum

But 42 cask breweries - surely that's too many for one small country? The Campaign for Real Ale's Scottish regional director, Ken Davie, says: "On the contrary, while Nielsen keeps showing a fall in cask, what it's really tracking is the lost volumes from national brewers which have abandoned cask.

"Take those volumes away and you have a vacuum which is being filled by small brewers. Some may fail, as with any business concern, but a great many are flourishing because people want their products. It's unfortunate for Arran, of course - but there's no crisis."

"Costs are severe, and inevitably the price has to be passed on to the customer - but the strength of really excellent products matters more than price"