Scotland's brewing scene is filling with more niche operations but is small more beautiful when it comes to beer?

Back in 1840, Scotland boasted an impressive 280 breweries. But by 1910 this had been reduced to 92 and a continuous decline eventually reduced that number to just 11 by 1970.

• Martin Dickie and James Watt of Brewdog

Fast forward 40 years and the brewing industry landscape has changed considerably once again, away from the large firms that dominated the market and back to smaller-scale operations - as of July, the number of active Scottish-owned breweries had risen to 56.

What began as a trickle over a decade ago is fast turning into a flood, not only in terms of start-up breweries, but in terms of consumer choice. Beer in Scotland was once the preserve of the monolithic multinationals, whose tied pubs what was available to the consumer.

But as the big breweries began to fall by the wayside, more licensed premises were offered up for sale, inviting offers from independent landlords and increasing consumer choice.

Although a few micro-breweries, such as Black Isle Brewery, had begun to develop their products in sheds or barns by the end of the 1990s, it was a change in government policy which acted as a catalyst for change in the domestic beer industry.

In June 2002, the then Chancellor Gordon Brown introduced Progressive Beer Duty (alternatively known as Small Brewers Relief), a 50 per cent reduction in beer duty for those breweries producing less than 5,000 hectolitres of beer. The aim of the initiative was to provide start-up breweries with an opportunity to become sustainable business ventures.

According to Neil Spake of specialist website Scottishbrewing.com, 24 new Scottish breweries have begun trading since the introduction of the PBD, with only two subsequent closures.

Jim Darroch, Edinburgh representative of the Campaign for Real Ale (Camra), said he is encouraged by the growth of the Scottish brewing industry although he warned that new companies must concentrate on long-term production: "The last thing the industry needs is small breweries going bust, although the signs are encouraging as those currently trading appear to have achieved a greater staying power."

Perhaps this should not come as a surprise as real ale has been enjoying a resurgence since 2004, shown by the number of breweries investing in larger premises or more equipment, and is backed by figures from trade body the Society of Independent Brewers (SIBA) and research group Mintel.

SIBA's Local Brewing Report 2009 shows that local beer production has bucked the general beer trend for the past five years and that it grew by 10 per cent in 2008. During 2009, the report says, "81 per cent of local brewers plan to invest in new equipment, 82 per cent in marketing and 75 per cent in increasing brewery capacity to meet rising volume demands".

Mintel analysts have also recorded an increase in ale's share of the overall beer market in 2009, and in particular the cask ale sector since 2007 - at lager's expense. Importantly, for the small independent ale houses, this increase closely tied to the more traditional outlet, rather than the wine bar model.

Although these are UK statistics, the evidence is that the story in Scotland is consistent with the wider picture. Ranging from the larger more aggressively marketed breweries such as Fraserburgh-based BrewDog all the way down to Edinburgh ultra-microbrewer Knops Beer, the Scottish brewing scene is awash with stories of hard-fought entrepreneurial success.

BrewDog is undoubtedly one of the UK breweries of the moment, and a resounding success story. Started in 2007 by two ambitious 24-year-olds, Martin Dickie and James Watt, BrewDog has taken the American craft beer format and brought it to the UK market with aplomb. Their marketing tactics may have caused controversy, but their beers have won multiple awards across the world.

It has continually grown at a rapid pace and expects to turn over 3.5 million at the end of its third year of trading. To complement its war on what it describes as "bland, tasteless and apathetic beer", BrewDog is next month in Aberdeen opening the first of what they anticipate to be many branded bars.

Whilst BrewDog's product range is expansive it has made its name in high-ABV beers (usually with quirky names, such as 5am Saint and Tactical Nuclear Penguin), but is not the only brewery to have identified that gap in the market.

The Madcap Brewery at Annan in Dumfries and Galloway is Scotland's newest beer production unit, starting up last November.

Owner and brewer John Maddison saw that most brewers concentrate on regular strength cask beers, around 4 per cent to 4.5 per cent ABV. "We saw a gap and decided to try to exploit it. We aim for the speciality beer market," he said.

For Maddison, word of mouth has caused something of a problem, albeit a welcome one. Balancing supply and demand was a tricky business and the brewery ran out of capacity almost immediately. Stronger beers take longer to ferment, so Madcap is already in the process of expanding in to a five-barrel industrial unit less than 12 months since their released their first beer.

This is now a familiar story amongst Scottish brewers. Highland Brewing Company on Orkney has recently expanded their production plant to quadruple their output. Others such as Black Isle Brewery, and Stewart Brewing in Edinburgh are also in the process of sizing up to meet demand.

The Progressive Beer Duty initiative can go some way to explaining the increasing prevalence of Scottish microbreweries. What it does not explain is the sudden increase in demand which has warranted not only the growth and expansion of one or two breweries, but brewing businesses across the board.

Robert Knops is an Edinburgh brewer who creates his recipes using a homemade brewery in his dad's garage but commercially brews at Traditional Scottish Breweries in Stirling. He has one suggestion as to why the demand has risen so rapidly: education.

"If you think back to the introduction of the New World Wines to the UK market they helped educate Joe Public on the complexities of wine. They were marketed in a different way and made wine more accessible to more people.

"Some of those wines are now considered a bit brash, but those people who were introduced to wine in that first influx are using their new-found knowledge and slowly migrating on to the more subtle Old World wines.

"I think this is what has happened to the beer market and people are becoming more interested in the complexities of beer. Its great for the industry as the market is so competitive all the brewers have been forced to up their game. The quality available in Scotland now is outstanding."

Knops Beer is very much at the bottom end of the brewery start-up process, a real labour of love which has been born out of a career in beer. Educated at the Heriot Watt International Centre for Brewing and Distilling, Knops cut his teeth in England and Wales before abandoning the production side of the industry and venturing in to sales and marketing for the Coors group before finally striking out on his own.

The Knops Beer philosophy is to turn non-ale drinkers on to ale by producing beers that are high on flavour and "drinkability".

Like many other brewers, Knops is focusing on the long term, with the intention of having three products this time next year and be in a position to construct a purpose-built brewery on the back of that.

Another reason for the growth of the Scottish beer, is origin of product. BrewDog MD James Watt says: "People want something better, something ethical, and something made by passionate people. Customers are becoming more and more aware of how and where the things they consume are made.

"I think there is growing disillusionment with products which are generic and mass-produced."

This sentiment is echoed by David Gladwin at Black Isle Brewery: "People are just fed up with mass-produced keg beer, and not many people drink cask beer. Keg ale provides a bridge to the gap between keg and cask beers."

This view is backed by Mintel's findings, that the ale sector has benefited considerably from the growth of micro-breweries, "which tap into a desire for products made by smaller, 'less corporate' businesses, and products with British provenance".

One Scottish micro-brewery has taken a different turn, breaking into the cider market. Thistly Cross Cider started up in 2008 and after 15 months of trading is already at the point they anticipated being in a further five years' time. But owner Peter Stewart agrees on why the microbrew business in Scotland has become so prevalent: "It's putting a face and a personality behind a product."

So what are the effects of this continued growth of the micro-brewing sector? If the SIBA statistics on local brewery versus general beer production are correct, where does that leave the large-scale producers?

Far from being threatened by the growth of the microbrewing sector, Caledonian Brewery's marketing manager Cameron Mather is positively enthused by the possibilities it has created.

He says: "It's great for the industry because it entices more drinkers to the ale market by increasing choice. We can't produce 30 or 40 barrels of a one-off ale, our minimum is 150 which is a lot harder to shift, and this is where the smaller guys can access that market. We started the revival in the mid to late 80s and what we're seeing now is the filtering through of those efforts."

Despite this enthusiasm, the expulsion of the company's flagship beer from some of the capital's leading real ale bars cannot be a good sign. These independent bars have a reputation for quality products and the removal of any brewery's beer indicates to the customer that the bar operators believe there are better products on the market.

Mather also warns about the long-term effects of the PBD: "It's something the government need to look at very carefully. It was designed for people to be able to reinvest and achieve sustainability, but the playing field is far from even and it could create problems in the long term."

These problems could include market saturation, and inevitably market failure whereby supply exceeds demand.

However, Jim Darroch doubts this will be the case: "I can't see time when the ale industry will be self sustaining to such a degree, I think it will always need support."

There is enough evidence to suggest that the Scottish micro-brewery sector is already close to reaching that point. Mintel suggest that the sustainability of the high-end pub market and the ale industry go hand in hand due to "increasing consumer expenditure, larger distribution and better storage of ale".

If ale sector growth continues further down the keg ale route where does that leave Camra, which has no specific policy on the product as it says it isn't part of British beer heritage?

"I think Camra will always be relevant' says Darroch. "The membership increases annually and we are now the largest consumer group in Europe."

However, there is strong evidence to suggest that keg ale may be the direction the UK ale market is moving in. In June, Doug Odell, of United States speciality brewer Odell Brewing Co, was in Edinburgh promoting his company's beers, which are now on sale for the first time in the UK. Odell is the 45th biggest brewery by production in the US - if the UK market was giving little indication that it could support a greater influx of foreign beers, people like Doug Odell would stay at home.

And last week BrewDog announced that the founders of the Three Floyds and Stone Breweries will be in Scotland this month and next to host food/beer evenings at Musa in Aberdeen. These breweries are legends of the craft beer world, and their beer is rarely available in the UK. The presence of these three is a clear indication that something is afoot in the UK ale market.

With many of the Scottish micro-breweries advocating the dispensing of ale from kegs and the influx of the American craft brewed beers, Camra may be in danger of being left behind. The Scottish brewing Industry however, is very much at the forefront of an ale revolution, cask or keg.

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