AS the energy crisis rages, soaring bills and crippling uncertainty are putting Scotland’s small businesses in a near-impossible position.
Across the north of the country, there has been a boom in boutique enterprises that have grown Scotland’s luxury brand image, both for tourists and domestic consumers.
One of those businesses that has combined the romantic imagery of the Highlands with expert craftsmanship is Rock Rose Gin. Based in Dunnet Bay in Caithness, the distiller has become known for its floral gins and distinctive-looking bottles.
Martin Murray, who co-founded the business with his wife Claire, spoke exclusively to The National to share the distillery’s experience of the energy crisis.
Reflecting on recent challenges, he said: “It’s been a difficult three years all in all. Since the pandemic kicked off, with the energy crisis and Brexit, I don’t think I could have imagined a triple whammy like what it’s been.
“We’ve been on the go for about nine years and this has been the hardest period we’ve faced. The energy crisis just doesn’t seem to have an end in sight.”
While Rock Rose have been partially shielded by a fixed energy supply contract, the price of energy-intensive raw materials that go into the packaging that is so essential to the business’s brand have soared.
Murray said: “If you think about the materials a distillery needs to use, the creative products, such as glass and cork, which are highly energy intensive, the prices are going up.
“Glass is incredible, it continues to rise every quarter. The bottles are about one-third up in price since last year. I’ve never seen that over the years – it’s really hard to absorb with all the other increasing costs.”
“It puts quite a bit of pressure on your business because you’re trying to get orders based on pricing and figure out these prices over a period of time. It’s almost impossible to do that because you are faced with the uncertainty of the energy crisis.”
For Rock Rose Gin and other luxury brands that operate in smaller volumes, the effect of these increased costs is particularly acute. Murray explained that, combined with smaller capital reserves to fall back on, it’s harder to spread costs over a lower volume of luxury products compared to the capacity of larger city-based firms.
And while the solution may be to expand operations, Murray said the same problems apply there: “We have a project to build a whisky distillery. Ideally, we would want to use renewable energy from the grid.
“At the moment, we don’t know if that’s a possibility because of the soaring prices and not knowing where the costs will land. The business is unviable from day one.
“Those concerns of not having any certainty, with there being no real communication on this on a regular basis – it just seems to be another crisis after another crisis.”
In a bid to bolster the business’s energy resilience, Murray has explored increasing its solar and battery capacity to give it more control over its costs. However, due to increased demand for solar equipment, it has become more expensive and difficult to obtain.
Murray said: “The payback time is longer and you don’t know what the price will be until you get it. We were priced a solar power system with a battery back-up and were told the battery would be priced on delivery so we didn’t know how much it was actually going to cost until it was delivered. No small business can do that – they can’t buy it and say, ‘we don’t know how much it’s actually going to cost in the end’.
“For those sorts of challenges, there has to be more support. The supply chains need to be fixed. Since the pandemic, they haven’t gotten back into gear – it’s so costly and difficult to buy these things.”
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Murray is not hopeful of a clear-minded approach from the UK Government: “It’s difficult because how many prime ministers have we had in the last five years? How many changes in policy? How many U-turns? We need stability, we need confidence and we just don’t have that at the moment.”
He added: “There needs to be a closer connection between the government and smaller businesses, I don’t think that exists at the moment. I don’t think they’re aware of the challenges facing small businesses. That really needs to be addressed.
“There just needs to be someone who can stand back and look at the bigger picture for smaller businesses and all the impacts that they have been affected by. That’s sorely lacking at the moment”.
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