Page last updated at 06:19 GMT, Friday, 13 June 2008 07:19 UK

Costs are threat to micro-breweries

By Phil Goodlad
BBC Scotland

Some of Scotland's micro-breweries have been warned that they might not survive the year amid an economic crisis facing the industry.

BBC Scotland takes a closer look at the problems affecting the industry.

Beer bottles
Producers said costs have risen

"It's like a depression has come over us. We just can't believe it's happened to the Arran Brewery," said Elisabeth Roberts.

She spoke to me from a business normally bursting with the noise of brewing beer.

Now it is the silence that is deafening.

Once employing a staff of 11 and boasting a 1m annual turnover the island business lies moth-balled, administrators having been called in last month.

She added: "Fuel prices haven't helped. Then there's the cost of producing beer. Every part of the process from brewing to bottling has risen sharply."

The figures speak for themselves. A year that has seen diesel prices go through the roof, malt and hops up 40% and sharp rises in the cost of glass bottles, labelling and cardboard have all taken their toll.

Now Scotland's almost 50 micro-breweries are feeling the pain. More could be on the way.

Douglas Ross owns Scotland Fine Ales, based in Bridge of Allan, and is a director of the Society for Independent Breweries (SIBA).

He said: "Unfortunately all the breweries are chasing the same piece of cake. There's bound to be more casualties before the year is out."

Donald Ross
Donald Ross said there are "bound to be more casualties"

He added: "You can buy a bottle of our beer from the supermarket for 1.65.

"More than a pound of that is spent on getting it to market so the margins are really tight.

"Moving away from the retail giants to smaller independents though isn't much of an option.

"The supermarkets bulk buy but at a lower cost. The independents pay more but take less. It's a catch 22 situation."

There's a third reason though why 2008 could be the year the beer went flat.

According to Patrick Ross from the Scottish Pub and Beer Association, we are simply not in love with a good pint like we used to be.

'Changing habits'

He said: "Since the height of beer drinking at the end of the 1970s we drink 14 million pints less each day in the UK.

"More choice and changing drinking habits have hit the industry hard."

All this spells trouble. And it could be that rural Scotland is hit hardest.

Predominantly based there, the micro-brewing industry employs people in fragile economic areas.

Job losses would be hard to take, especially in the current economic crisis.

It could be that Arran may not be the only area of Scotland with an empty micro-brewery in the next few months.

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