Punk rebellion: BrewDog’s crowdfunding investors start to lose faith


BrewDog’s “equity punks” are in revolt.

A 180,000-strong army of crowdfunding investors has helped fuel the company’s growth over more than a decade, turning it into the UK’s largest craft brewer.

But the loyalty of these shareholders has been shaken, after former staff accused BrewDog of misogyny, a “toxic” attitude to junior workers, and pursuing “growth at all costs”.

Some of the small investors the Scottish brewer calls “punks” — who have invested more than £80m and been reliable drinkers of its lagers and ales — are now concerned that attractive financial terms offered to private equity groups mean they will end up losing money even if BrewDog’s value increases.

“I wouldn’t have invested at all if I’d known what the culture was within the company,” said Andrew O’Neill, a 53-year-old veteran of Belfast’s hospitality industry who invested several thousand pounds last year. “The sheen has come off BrewDog for me.”

Richard White, a London-based brewer who invested eight years ago, said: “I’m angry and I feel a bit responsible for enabling this . . . I feel a bit guilty for swallowing the BrewDog Kool-Aid, because clearly that hasn’t been everyone’s experience.”

The company, seen as one of the biggest success stories of the UK’s craft beer boom, has struggled to respond to the criticism, risking alienating the “punks” who have provided crucial funding for its expansion. The complaints bring a further challenge after BrewDog’s growth slowed sharply in the pandemic, making it harder for the company to justify a high valuation as it moves towards a planned IPO.

Ahead of the pandemic, independent Scottish craft brewer BrewDog had been looking to list in 2020. © Brewdog

“If not adequately addressed, then the criticisms could grow into a crisis for a consumer-led business like BrewDog,” said Dave McCarthy, managing director at consultancy Drinks Adviser.

Private equity takes priority

BrewDog was founded by its current chief executive, James Watt, and Martin Dickie, then aged 24, because they “were bored of the industrially brewed lagers and stuffy ales that dominated the UK beer market,” the brewer’s website says.

It now has more than 100 bars — in cities including Las Vegas, Tokyo, Shanghai and Brisbane, as well as dozens across the UK — beers sold in major supermarkets, and a valuation pushing close to £2bn.

Like many of its rivals — such as Camden Town Brewery, now owned by Anheuser-Busch InBev, and Scotland-based Innis & Gunn — BrewDog used crowdfunding to propel its early growth.

It defied critics to deliver strong returns to early investors. Neil Fletcher, an administrator, invested £3,450 with his husband in BrewDog’s early days and has since sold enough shares to pocket more than £22,500 while retaining most of his holding.

But unlike some competitors, BrewDog has continued raising money from individuals while reaching considerable size; it reported £182m of net revenues last year.

BrewDog’s rapid growth

Since the claims emerged from former staff, individual investors have berated BrewDog executives on a company-run shareholder forum.

Watt has promised change and an independent review of the company’s culture.

“I know the events from the last few days have caused a lot of pain for all of our team members and our community and I can only apologise for that,” the chief executive told shareholders last week.

BrewDog has made Blythe Jack, a managing director at private equity firm TSG Consumer Partners, which bought a stake in 2017, chair of its board in the wake of the claims.

But some investors remain unhappy. While many primarily view their small shareholdings as something like a loyalty card, since shares entitle them to discounts on beer, others — especially those with larger holdings — want financial returns.

That is made harder by the fact that TSG, which declined to comment for this article, is guaranteed an 18 per cent compounding annual return on its 22 per cent holding in the event of an IPO or sale. This return takes priority over other shareholders, according to BrewDog’s prospectus, meaning newer investors risk making nothing or losing money even if the company’s value rises.

“If BrewDog raise the maximum £50m at the current valuation of just under £2bn, investors in the latest UK Equity for Punks crowdfund would only get their money back if the company sells for [about] £2.2bn in 2024,” said Myrto Lalacos, investment executive at venture capital firm Praetura Ventures. 

Brewdog’s latest crowdfunding round values it at about 10 times net revenues © Getty Images

O’Neill said he had been unaware of the returns contracted to TSG when he invested, though they are set out in BrewDog’s prospectus. “I wouldn’t have invested with them if I had known,” he said.

Other investors have made similar complaints. “I don’t expect to make any money out of an IPO — if one ever happens,” one said this month. Ahead of the pandemic, the brewer had been looking to list in 2020.

‘Remarkable’ valuation

Brewdog’s latest crowdfunding round values it at about 10 times net revenues. McCarthy said the valuation was “remarkable” considering that listed brewers such as Heineken and Molson Coors trade at enterprise values of two to four times net revenues. 

“The challenge is that BrewDog is now a large business and craft beer is maturing — it’s no longer the explosive growth category that it once was . . . So achieving that valuation is going to become increasingly challenging,” he said.

The brewer made a loss of £7.4m in 2020, down from a £3.7m profit a year earlier. Its net revenues were up 4.2 per cent to £182m in 2020, having risen 25 per cent the previous year.

Some observers have questioned the group’s strategy. “Most brewers build up their pub estates by taking pubs near to their brewery and building up through going to towns one step further away and so on . . .[BrewDog] have postmarks all round the world,” said Nigel Parson, research director at FinnCap Capital Markets.

He added that the further afield BrewDog ventured, the more risky and complex the business became.

Other decisions have prompted unease among staff.

In 2013 BrewDog said patrons could buy equity in the brewery from its bars “alongside their Punk IPA”, a policy that was revived in several recent crowdfunding rounds, making some bar staff uncomfortable, according to a former employee.

Stockpiles of BrewDog beers at their brewery: BrewDog’s growth slowed sharply in the pandemic, making it harder to justify a high valuation © Getty Images

The “punks with purpose” group of former staff said the company had used a private jet and “charter[ed] flights across the Atlantic that had to be filled with staff to justify them even going ahead”, claiming these undermined BrewDog’s sustainability goals.

The company said: “BrewDog is the world’s first carbon negative brewery, removing twice as much CO2 from the atmosphere as it creates. It has an industry-leading environmental impact action plan.”

The current fundraising prospectus said the company paid “approximately £125,000 annually . . . for flights” to Jet Pack Pie Limited, which is wholly owned by Watt. BrewDog declined to comment on what flights these were or why Watt’s company was involved.

In other related party transactions, the company and its US arm pay almost £200,000 a year in rent to property companies owned by Watt. The chief executive earned £177,094 last year in salary and benefits. BrewDog declined to comment on the transactions, calling queries about them “tangential”.

Lauren Carrol, special projects director at BrewDog, said: “Our equity punks community is massively important to BrewDog and we are proud that it continues to grow. There are many public and private channels to ask questions, raise queries or escalate complaints.

“Our prospectus is always clear and we urge all investors to read all of it before making any investment decisions.”

But the brewer will have to work to regain trust. Lewis Nyman, another investor, said: “I’ve been on Twitter encouraging people to boycott BrewDog until they manage to steady their own ship, and learn to treat their staff…


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