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August 4 is International Beer Day, a day to celebrate beer in pubs, breweries, and backyards world over. The day's organizers invite all to raise a glass to celebrate the heroes behind each tasty brew.
Two of those “heroes” of beer are James Watt and Martin Dickie, founders of Scotland-based BrewDog brewery. If you don't know them or BrewDog now, you are sure to know them soon. BrewDog has crossed the “pond,” bringing to America the founders’ irreverent approach to business, along with their total devotion to the brewing craft and beer. They say, “We live or die by the quality of the beer in your glass.”
Watt and Dickie founded BrewDog in 2007 when both were 24 years old. Their initial inspiration came after growing bored by the industrial-brewed beers and ales then available in the U.K. market, so they started brewing small batches of beer to suit their more refined tastes.
When their friends liked the beers produced as much as they did, Watt and Dickie started selling the brews out of the back of a van. Then, when they couldn’t keep up with demand out of the garage, they decided to build brewery and go into business full-time. So they followed the standard business-building playbook: going to the bank to finance their first brewery and distributing the brew through normal channels.
Within just a year, BrewDog quadrupled its brew production, as a growing fan base of U.K. beer enthusiasts shared Watt and Dickie’s disdain for the usual industrial swill and supported their original mission, “to make other people as passionate about great craft beer as we are.”
But then the alcohol industry’s establishment, The Portman Group, tried to shut down the disruptive upstart.
Kickstarting a brand
BrewDog challenged the industry with the launch of its Tokyo brew and its claim to be “the strongest beer ever brewed.” The beer industry association with big league players including Carlsberg, Diageo, Heineken, InBev and Molson Coors filed an injunction claiming BrewDog violated the industry’s Code of Ethics. A media firestorm erupted as BrewDog fought back countering that Portman was impeding the development of smaller brewing companies. After an eight-month legal battle, BrewDog was cleared of all charges and allowed to continue its contrarian marketing campaign.
Perhaps it was due to this first David vs. Goliath battle, or Watt and Dickie’s entrepreneurial zeal, but this initial dog fight set the company along a new course in opposition to the traditional brewery business. They developed what they call an “anti-business business model” based on building a community that shares not just love for BrewDog beer, but actual ownership in the company through a crowdsourcing model.
Its first “Equity for Punks” crowdfunding campaign, named in honor of its flagship Punk IPA, was launched in 2009 and initially attracted over 1,300 investors, with two shares in the company offered for a modest ₤95 investment. In addition to shares, Equity Punks also get discounts in each of the company’s 29-and- counting U.K. BrewDog pubs and 16 international locations, plus an invitation to its “Annual General Mayhem” shareholders meeting.
BrewDog continues to nip at the heels of the beer establishment. In so doing, they have learned how to exploit the media to grab public attention that no amount of paid advertising could hope to match. Well, maybe Clydesdales and puppies in 30-second spots on the Super Bowl get more eyes, but BrewDog’s David against Goliath efforts earn true devotion.
Take its effort to invite “fat cat” London bankers to invest. In May 2015 BrewDog parachuted dozens of costumed taxidermy cats from a helicopter during London rush hour with each bearing an investment prospectus for the next round of Equity for Punks crowdfunding. The stunt garnered heavy media coverage and was immediate click-bait online. And it yielded results: ₤5 million worth, well on its way to the company’s ₤25 million goal.
BrewDogs’ Equity for Punks crowdfunding model has been the driving force in building its breweries and locating its pubs where its loyal Punk investors live, with the company able to geolocate new pubs with heat maps of where its Punks live. These investors are also funding its overseas expansion, and it has landed on our shores bringing the BrewDog beer experience to the U.S. and soon to Australia.
BrewDog’s invasion into the U.S.
BrewDog has big plans for the U.S. market, which co-founder James Watt notes is a “country that loves to supersize.” He continues, “We want to take our craft beer revolution global. From building a brewery, to opening craft beer cathedrals across the country, and even giving our American fans the chance to own a part of the business, we are going big. We still have a long way to go, but we can’t wait to firmly plant our BrewDog flag on the Land of Independence.”
The new U.S. brewery, located in Canal Winchester, Ohio, just outside of Columbus, will join its Scotland-based Ellon brewery to supply the world with BrewDog beer. Slated to open August 27, the brewery will host a “kickoff extravaganza” to celebrate.
To date, the company already opened its first U.S. DogTap taproom next to the brewery and plans to open five more DogTap pubs in the states. Also located adjacent to the brewery and pub is the DogHouse Hotel. Hotel guests can enjoy an authentic hopped-up beer experience, with each room equipped with a Punk IPA tap and an in-suite beer fridge in the shower, plus its Beer Spa offers treatments with bespoke hop oils.
“Move over little dog, the mean old dog is movin’ in”
So sang George Thorogood & the Destroyers in "Move It On Over" and it expresses the company’s “mean dog” plans for the future. The ultimate end game for the company is to “float the business on the stock market, so those people who invested in shares will get real monetary value,” said Ben Stewart, heading up sales and marketing for BrewDog USA.
For some Punk partners, the opportunity to cash out has arrived. A recent strategic equity investment by San-Francisco-based TSG Consumer Partners values the company at $1.24 billion, and rounds one through four Equity for Punks partners are offered a chance to sell 15 percent of their shares (capped at 40 shares per investor) at the $1.24 billion valuation. In keeping with the company’s crowdfunding model, Equity Punk partners were given a chance to vote in advance on the proposed TSG investment with 95% of shareholders favoring the deal. TSG’s funding is slated to provide growth capital for new breweries in Asia and Australia.
“Our new partnership with TSG is a launch pad for us to turbocharge our mission to make the world as passionate about craft beer as we are, but it’s also a validation of our crowdfunding model,” James Watt explains. “Our Equity Punks now own part of an independent business that has attracted an awesome partner who will help grow their investment even further. Crowdfunding can no longer be viewed as alternative finance; this is the democratization of finance.”
BrewDog’s founders started like thousands of other entrepreneurial dreamers creating product hands-on in their garage. As their handcrafted brews began to get followers, they decided to turn their part-time hobby into a full-time business.
In doing so, they quickly ran into the entrenched industry establishment determined to block their every move. But as Mark Twain said “It’s not the size of the dog in the fight, it’s the size of the fight in the dog,” and BrewDog’s Watt and Dickie have plenty of fight. By not taking themselves too seriously, though never compromising their mission, they made bold moves that have drawn people all over the world to their corner. In exchange for their loyalists’ support, BrewDog gave them a valuable stake in the business that assures long-term customer loyalty and business growth in the future.
