Scots brewers thrive in wake of BrewDog, Innis & Gunn woe

Throw into the mix the complications that have arisen from the conflict in the Middle East and things certainly do not look any easier.

However, despite the challenges there are small independents in Scotland that are finding a way to prosper, whether by establishing local routes to market, running their own festivals or identifying ways to cut production costs.

Sam Faircliff, managing director of the award-winning Cairngorm Brewery in Aviemore, told The Herald Business HQ that business in Scotland “needs a break” and a “period of stability” from cost hikes, noting that the “state of the current economy makes it very difficult to pass all the additional costs on to our customers”.

And she branded the structure of the energy market as an “absolute minefield for the average businessperson”. However, Cairngorm has been successfully charting a way through the challenges.

Read more:

• Scots hotels urged to 'use it or lose it' after latest rates blow
• High-profile banker believes Edinburgh institution can 'redefine how it is done'
• Bridge of Weir Jaguar supplier launches new venture with former Superglass chief
• 'Crashes and Covid': How one Ayrshire hotel firm thrived over 30 eventful years
• Why veteran restaurateur Alan Tomkins makes a very good point about Glasgow

Ms Faircliff said: “We pride ourselves on producing consistently quality beers along with maintaining good customer service and this has meant that customers appreciate that we bend over backwards to get product to them when they need it. It is tough with competition for us all to maintain sales.

“Our strategy to have sales in cask, keg and bottles throughout Scotland is definitely an asset.

“After the Covid years, which were so difficult for our industry, followed by the energy crisis we finally returned to profit last year, which was just short of six figures and we are on target to exceed that in the current year.”

Cairngorm has had more to shout about recently than just returning to profit. The recent CAMRA (Campaign for Real Ale) awards saw the brewer lift the silver prize in the overall champion beer of Britain category for Wildcat, its premium bitter. Cairngorm also won gold medals in the premium bitter, session stouts and porters categories for its Wildcat and Black Gold beers.

Ms Faircliff said: “Awards from CAMRA and SIBA (Society of Independent Brewers and Associates) are important to us and it shows we can consistently produce great beers. As soon as the award was confirmed we received enquiries from potential new customers and there will be more to come but it is too soon to tell how much additional business came directly from the award. Champion Beer of Britain is the most prestigious award in the country and to have two of our beers in the final 12, two years on the trot, is quite an achievement for Cairngorm Brewery.”

Ms Faircliff added: “It is not all negative when it comes to support and we have found that organisations such as Highlands and Islands Enterprise and Scotland Food and Drink have been very supportive and helpful over the past few years.

“We have over the past couple of years embarked on a programme to make our business more self-sufficient and efficient with the installation of solar panels, a CO2 recovery plant and new fermentation vessels. We are currently working on a project to install a COBOT (collaborative robot) and bottling line sensors which would improve the efficiency of the bottling line.”

Another independent that is being creative as it adapts to the current climate is Two Towns Down, a Paisley-based brewery and taproom run by Sandy McKelvie with his mum Liz.

Mr McKelvie, who founded Two Towns Down after graduating from Heriot Watt University’s respected brewing and distilling course in 2019, said the conflict in the Middle East has made life even more difficult for brewers in recent months.

But his company is finding comfort in diversification. Two Towns Down sells its beers, which are named after songs, through its online store, taproom, local bars, and independent bottle shops throughout the UK, and also takes its mobile bar to events such as weddings.

Mr McKelvie told The Herald: “Conditions are challenging. The cost base for independent brewers has risen sharply, with fuel surcharges now appearing on virtually every invoice.

“Some suppliers have responded by putting their prices up by as much as a third. We have taken a cautious approach, making only modest adjustments in the taproom and on wholesale, out of concern that consumers facing their own cost-of-living pressures can only absorb so much.

“We are also pursuing greater diversification. Mobile bars at events, from operas to gala days and weddings, have become an important additional revenue stream. Our success to date has been word of mouth, but we’re planning to market our offering more actively. Our beers aren’t available in supermarkets, so they give event organisers something genuinely different to put in front of guests.”

Mr McKelvie added that Two Towns Down, whose best-seller is These Streets, a 4% ABV (alcohol by volume) pale ale, relies heavily on friends and family who work shifts in the brewer’s taproom and bar.

“Sales go through the taproom, an online shop, and independent bottle shops across the UK,” he said. “Glasgow and Edinburgh are the strongest markets, though we sell well in London too. Thirty-litre kegs are available, but their weight makes transport a challenge, so draught supply is largely local.

“Our best-selling beer is These Streets, a 4% ABV pale ale, and our lager, Belter, 4.5% ABV is very popular. Our charity lager Yes Sir, I Can Boogie, which supports the Tartan Army Sunshine Appeal with a 10% donation from sales, has also been doing well because of the World Cup.

“We run our own festival every March, which has become financially important not just for Two Towns Down but for other independent operators too. Several have credited it with providing meaningful cash flow during what are typically the quietest weeks of the year.”

Meanwhile, Pamela Muir, insolvency partner at law firm Thorntons, was clear what would help the industry most when asked what assistance from the Government would be the most beneficial.

“Without hesitation, as with so many other sectors, it would be a fundamental reform of business rates as they apply to hospitality and brewing premises,” Ms Muir said.

“The current system penalises physical presence at a time when we should be incentivising investment in productive, community-based businesses.

“A brewery tap room in Dundee or a craft pub in Shetland is doing something economically and socially valuable. It employs people, it creates interest in the high street, it generates tourism and the rates’ burden on those premises can be enormous.”

Mr McKelvie said slashing value-added tax to 10% for the hospitality industry “would be felt by both brewers and the hospitality businesses we supply”, although he observed such a change was not without risk.

He added: “Brewers and venue operators would have more room to breathe.

“We are slightly concerned that larger operators would simply pass on the saving rather than using it for its intended purpose of alleviating the pressure on hospitality’s margins, in which case the policy only helps the big players undercut independents even further.

“Any intervention needs to be designed with that risk in mind.”

Ms Faircliff asked of government: “Do not throw any other new costs and regulations at us for at least three years and cut beer duty.”

Meanwhile, commenting on the fall into administration of BrewDog and Innis & Gunn earlier this year, Ms Muir said: “Both failures had company-specific factors and both were different, but lessons can be learned.

“Both cases carry warnings for the wider industry. They illustrate the dangers of confusing brand growth and momentum with financial resilience. They also demonstrate that scale alone does not offer protection from a changing consumer base.

“We’re now in a market where agility in all things from meeting consumer needs to funding provision is a competitive advantage, and lack of flexibility due to high debt levels can become a burden.”