BrewDog on turning ten: more corporate than they like to appear

BrewDog celebrated ten years in the industry with a GBP 213 million (USD 275 million) investment by private equity firm TSG Consumer Partners. Selling a 22 percent stake to outside investors in April 2017 did not quite make BrewDog the pariah of craft brewing – a fate that befell Wicked Weed – but it still made commentators wonder whether BrewDog’s punk behaviour was not more image than essence.

Here’s the answer: Anyone who accepts an MBE from the Queen, as BrewDog did last year, cannot be anti-establishment deep down in their proud little Scottish hearts.

Never mind the crass language and anti-corporate stabs, BrewDog’s founders James Watt and Martin Dickie have always been shrewd businessmen. That’s how they built their beer empire. They would not have been able to gallivant around the world promoting themselves and their beers via an entertaining TV series on Esquire Network (2013 - 2015, three seasons, 27 episodes), if they hadn’t established a robust corporate organisation and hired a PR agency to look after the shop in their absence.

Their efforts certainly paid off. The deal with TSG valued BrewDog at GBP 1 billion (USD 1.29 billion). Some GBP 100 million will be invested in the business by TSG, which also owns US brewer Pabst. Mr Watt and Mr Dickie are believed to have made GBP 100 million between them as a result of the deal.

As well as running a hugely popular brewing business, the company now operates 30 bars in the UK and another 20 in the rest of the world.

BrewDog’s focus on bars in the UK again underlines how “normal” their business approach has been. Vertical integration has been the rule of the game in the UK’s beer business for most of last century, despite the temporary disruptions caused by Mrs Thatcher’s Beer Orders in 1989. In 2016 overall EBITDA for the BrewDog group was GBP 7.1 million (USD 9.1 million), based on sales of GBP 70 million. Bar sales accounted for GBP 22 million (USD 28.5 million) of this, based on an average spend per head of GBP 10 to GBP 12, it was reported.

BrewDog expects turnover to rise to over GBP 100 million in 2017, with GBP 35 million (or a third of turnover) coming from bars. The aim is to hit 65 to 70 bars in the UK by 2020 with a similar number internationally.

Until last year, all of BrewDog’s 16 international sites were operated with local partners on a franchise basis. Yet, in November 2016, it opened its first international company-owned site in Berlin. In future, it is likely the company will open the first flagship store in a key location, then work with partners to roll the brand out further.

Doesn’t all this remind you of the workings of a Big Brewer? Nothing wrong with that, in my view.