BrewDog brews up coffee

Imitate or innovate? In an attempt to bring more customers through its bar doors, the Scottish punk brewer BrewDog has bought a 33 percent stake in the Edinburgh company Third Wave Coffee, UK media reported on 6 April 2016.

What’s new? The cut-price pub chain JD Wetherspoon, with over 900 pubs around the UK and Ireland, already started selling coffee in 2010. Like other pub companies, Wetherspoon has been forced to adapt to the fast-growing coffee and casual dining chains by broadening its offerings, observers say.

Unlike Wetherspoon, BrewDog will part-own the coffee company whose brew it will offer in its 31 UK bars, where it previously sold coffee produced by a third party.

Third Wave’s name is understood to be a reference to the so-called second wave of coffee culture that saw chains such as Starbucks and Costa come to dominate the high street.

In early April, BrewDog released its 2015 financials which show that pre-tax profit fell from GBP 3.65 million to GBP 3.5 million (USD 4.9 million). Profits stagnated, despite a 51 percent increase in revenue, from GBP 30 million to GBP 44.7 million (USD 63 million), with UK sales up 131 percent.

The fall in profits is attributed to heavy investment into bars – outside the UK BrewDog has now 45 – and into increasing brewing capacity.

The company’s spending included GBP 20 million at its Ellon brewery on the east coast of Scotland, to raise capacity fivefold to 1 million hl. And, in order to better attack the U.S. market, BrewDog has invested GBP 17.6 million (USD 25 million) in the construction of a 100,000 hl brewery in Columbus, Ohio, which is expected to come on stream this summer. In March BrewDog announced that the former Dogfish Head brewer Tim Hawn will become its Head of Production in the United States.

All in all, things seem to be running smoothly for BrewDog, were it not for its most recent crowdfunder in the UK. Launched in April last year, BrewDog recently admitted to only have collected GBP 14 million (USD 20 million) so far, which is a few million shy of the original GBP 25 million target. Therefore, BrewDog has reached out to its fans via Facebook in an effort to encourage “friends” to invest before the deadline set for 20 April 2016.

The ongoing campaign has been criticised for valuing the company at more than GBP 300 million (USD 424 million).