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Beer firm will boost production to tackle tax relief reduction

ARRAN Brewery has said it plans to invest £80,000 to expand production three-fold at its island facility and the same amount again to grow its export presence beyond Spain, France and Japan.

The commitment to expand production on Arran is part of a wider push to ramp the company's annual output from 5000 to 50,000 hectolitres next year.

The production leap, which will also be powered by plans to open a new brewery at Loch Earn and a third at an undisclosed location, is designed to overcome the reduction in tax relief it will incur as its output increases.

Under the Small Breweries' relief scheme, brewers producing 60,000 hectolitres a year or less may qualify for reduced beer duty.

The relief can amount to a duty reduction of 50% for brewers producing 5000 hectolitres or less, with the rebate falling as output levels rise.

Arran, which is seeking grant support for its expansion plans, is looking to add further fermenting capacity, storage tanks and a mill at its island base, as well as grain storage and handling equipment.

By taking steps such as crushing its own grain and brewing in larger volumes, it hopes to reduce output costs by up to 24p a bottle.

Managing director Gerald Michaluk said: "At the end of the year we will have two breweries and probably a third coming on line, so we are going to have to smash through it [duty barrier]. The objective is to go about to 10 times [our current output] to 50,000 hectolitres and above."

Mr Michaluk said the expansion will create openings for four further brewers. The recruits will ultimately take the team to six, who will work on a rotating basis across three breweries.

Meanwhile, Mr Michaluk said Arran was now looking to add a bottling line at the sake brewery it plans to build in a former school at Dreghorn, North Ayrshire.

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