ARRAN Brewery has admitted it got its distribution strategy wrong as losses widened at the craft beer producer last year.

The brewer, owned by Gerald Michaluk, reported a trading loss of £108,162 despite turnover growing by 45 per cent to £1.4 million, although its most recent accounting period was extended by three months. That meant the rate of revenue growth recorded by Arran was 36 per cent.

The company, whose brands include Arran Blonde, had made a loss of £69,077 before tax in its previous financial year.

While its most recent accounts showed a big increase in revenue, Mr Michaluk said the brewer has had to take urgent action to improve its distribution arrangements and curb bad debts. He admitted: “We had to write off bad debts of some £52,462 and increased distribution costs of £58,975 over what we would have expected based upon the volume of business volume increase.

“Clearly we have got our distribution strategy wrong and need to address this urgently. Other bad debts related to trade customers going into administration and poor risk assessment and lack of trade account credit limits being set as we moved to a new accounting package.”

Mr Michaluk said Arran is striving to minimise bad debts by only issuing credit where it is needed to secure business, where company guarantees are provided, and where the “balance sheet justifies the risk”.