Efforts are made to change from 1st to 2nd generation bioethanol production, using lignocellulosics as raw materials rather than using raw materials that alternatively can be used as food sources. An issue with lignocellulosics is that a harsh pretreatment step is required in the process of converting them into fermentable sugars. In this step, inhibitory compounds such as furan aldehydes and carboxylic acids are formed, leading to suboptimal fermentation rates. Another issue is that lignocellulosics may contain a large portion of pentoses, which cannot be fermented simultaneously with glucose by Saccharomyces cerevisiae. In this thesis, high local cell density has been investigated as a means of overcoming these two issues. Encapsulation of yeast in semi-permeable alginate-chitosan capsules increased the tolerance towards furan aldehydes, but not towards carboxylic acids. The selective tolerance can be explained by differences in the concentration of compounds radially through the cell pellet inside the capsule. For inhibitors, gradients will only be formed if the compounds are readily convertible, like the furan aldehydes. Conversion of inhibitors by cells close to the membrane leads to decreased concentrations radially through the cell pellet. Thus, cells closer to the core experience subinhibitory levels of inhibitors and can ferment sugars. Carbohydrate gradients also give rise to nutrient limitations, which in turn trigger a stress response in the yeast, as was observed on mRNA and protein level. The stress response is believed to increase the robustness of the yeast and lead to improved tolerance towards additional stress. Glucose and xylose co-consumption by a recombinant strain, CEN.PK XXX, was also improved by encapsulation. Differences in affinity of the sugar transporters normally result in that glucose is taken up preferentially to xylose. However, when encapsulated, cells in different parts of the capsule experienced high and low glucose concentrations simultaneously. Xylose and glucose could thus be taken up concurrently. This improved the co-utilisation of the sugars by the system and led to 50% higher xylose consumption and 15% higher final ethanol titres. A protective effect by the capsule membrane itself could not be shown. Hence, the interest in flocculation was triggered, as a more convenient way to keep the cells together. To investigate whether flocculation increases the tolerance, like encapsulation, recombinant flocculating yeast strains were constructed and compared with the non-flocculating parental strain. Experiments showed that strong flocculation did not increase the tolerance towards carboxylic acids. However, the tolerance towards a spruce hydrolysate and especially against furfural was indeed increased. The results of this thesis show that high local cell density yeast cultures have the potential to aid against two of the major problems for 2nd generation bioethanol production: inhibitors and simultaneous hexose and pentose utilisation.