The Arran Brewery has announced plans to sell a 45% stake in its Loch Earn brewery, hotel and visitor centre. The spectacular Victorian former hotel is situated in the village of St Fillans, in Perthshire, at the east end of the Loch.

The plans for the site include a 33-bedroom hotel, three bars, banqueting facilities for 500, three restaurants, and a coffee shop, not to mention a visitor shop, 3,500 litre-a-day brewery, and cider shack. The lochside location also has three piers and a ramp for launching boats, as well as ten moorings, and was formerly was the site of a sea plan operation.

The brewery is considering the partial sale to another brewery, hotelier,  venture capital firm or to the public via a crowd funding arrangement.

Brewery managing director, Gerald Michaluk, said: “We are simply copying the Drygate brewery shareholder model to avoid paying a higher than needed duty level until the brewery is established.

“Drygate Brewery Ltd, in its Companies House return, has its shares split into two types — class A and B — and in total there are 100 shares. Forty of the A shares are held by Heather Ale Ltd and the remaining A shares — 11 — are held by the Drygate Brewing Company Trustees Ltd, while all the B shares (49) are held by Tennents Caledonian Brewery Ltd. 

“We plan to hold on to 49 B class shares in the venture, while selling 45 A class shares and offering shares for rewarding the management team on a rotating share basis.”

‘Fault in HMRC duty reduction model’

He added: “If the Arran Brewery was simply to add this brewing capacity to its portfolio, both sites would see their duty bills double instantly. This is the fault in an otherwise excellent HMRC duty reduction model that levels the playing field between the very large breweries and the small breweries.

“Arran Brewery currently qualifies for a 50% reduction in the duty it pays, but if it produces more beer the duty rate would rise very rapidly, outpacing the economies of scale from the increased volume. Thus, duty rates becoming a barrier to growth at 500,000 litres of production. Not, I am sure, what HMRC and the government intended. In fact the current model is being reviewed by the the Treasury.

“By selling the stake in the business we can fund the remaining elements of the project and make it fly. There is a saying a piece of a big pie can be better than the whole of a small pie. We hope to find a partner who will share our vision for the site and that, together, we can complete this project and benefit our shareholders and stakeholders alike”

The Arran Brewery and its backers have invested more than £700,000 in the site at Loch Earn, including the purchase of the building, stage one refurbishment, equipping the brewery, and adding the cider production facility.

The brewery is being commissioned in the last week in April and the first phase of hotel rooms will come on line at around the same time.

The site is also licensed for Made Wine and has provision in its plans for apple brandy, gin and whisky production.

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