BrewDog, the UK-based microbrewer, has dropped its legal action against the Portman Group less than a week after announcing its intention to sue the industry watchdog.

The company had hired lawfirm Pitmans to take up a defamation action against the industry regulator for comments by chief executive David Pooley about BrewDog and its product Speedball.

The Portman Group recently issued a press statement, which stated the alcohol industry watchdog was calling for retailers to no longer stock the Speedball beer.

Pooley was quoted as saying: "BrewDog is profiteering from the scourge of illegal drugs, mocking the misery caused by the issue."

Although still "angry" over the allegations, BrewDog managing director James Watt said this week that the company has decided to drop the case, however.

He said: "Legal action would have been quite detrimental to us because it would have been very time consuming at a time when we have a lot ongoing, including a major new product launch at the end of this month and expanding to the pub and on trade sector across the UK. It could have gone on for months and we just want to get on with things now.

"But the accusation that was levelled at us was a ridiculous allegation to make. We make edgy, innovative beer that is completely legal."

The Portman Group welcomed BrewDog's decision to drop the case and stood by the comments made in the ruling.

"They've informed us that they want to draw a line under this dispute," said David Poley, Portman Group chief executive. "Marketing alcohol on the theme with illegal drugs is completely indefensible. Therefore, any legal action by them would have been hotly contested by us. We're pleased that the company has decided to concentrate on selling responsibly marketed products."