Arran looks overseas after £1m grant snub

Group business correspondent

Wednesday 20 March 2013

ARRAN Brewery is embarking on a "Gypsy strategy" that will see it transplant production overseas to quench demand for its brands around the world.

BIGGER PICTURE: Managing director Gerald Michaluk considering New York brewery. Picture: Kevin Gibson

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SCOTT WRIGHT

The new approach comes after the Scottish Government refused the business a £1 million grant to help expand its brewery on Arran.

The project, which would also have seen the addition of a new bottling line at the company's Rosebank Distillery in Falkirk, had been scheduled to bring 10 new jobs to the island and 76 to Scotland in total.

Managing director Gerald Michaluk said expanding production on Arran was not viable without grant aid because of the high cost of shipping beer from the island and the higher duty bill the business will incur as soon as annual production exceeds 5000 hectolitres – and output is already close to that threshold.Now Mr Michaluk is looking to make Arran's beers abroad as an alternative way to expand production and achieve global growth.The idea is to dispatch trained brewers from Arran to brew its beers, which include the Blonde, Dark and Sunset brands, in cities like New York, Beijing and Calcutta, and sell market the products via partner breweries' distribution networks.Mr Michaluk has already visited a brewery in Zaragoza, Spain, which he said operates equipment similar to Arran's.The project may also bring a Scottish jobs boost, as the com-pany will recruit brewers and marketing staff to aid its inter-national development.Mr Michaluk said the strategy is environmentally sound and cost effective because it removes the need to ship large volumes of beer around the world.However, he said it will force the company to "sacrifice" the provenance of its products.Mr Michaluk added: "We will use a process called reverse osmosis to take the minerals out of their water and then replace them with the natural minerals that are in our water, and use the same yeast."But you never get exactly the same [taste]. It's like Guinness."Guinness used to make beer all round the world and of course everyone use to say it never quite tasted as good as it did in Ireland. I think we will be in exactly the same position. Arran Blonde will always taste better on Arran."Mr Michaluk said the company would continue to brew on Arran for the Scottish market.He pointed out it would not be the first brewer to make its brands elsewhere in the world, but emphasised it would not disguise the fact.He said: "A lot of the big brewers use this [model] all the time, they will recreate [a recipe]. What we're try to do is recreate a craft beer, but we're going to be very up front about it. We're telling everybody what we're doing."Asked whether the new strategy was a negotiating stance designed to persuade the Government to re-think the grant decision, Mr Michaluk added: "Our existing plan would have been better for the Scottish economy."It would create more jobs, it would be export income earned, it would have been more money going to the Chancellor and we would have been subsidising Calmac Ferries."It would be much more beneficial for the Scottish Government [for us] to brew the beer here and export it. But I can't do that because of the way the duty lies and the economics of working on the island."

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Arran looks overseas after £1m grant snub

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