Scottish brewer BrewDog is one of the most dynamic and innovative brewers around at the moment. They have a clear idea of what kind of beer they want to brew and a strong sense of history and ‘authenticity’ in brewing, despite their ‘smash the establishment’ punk attitude. More importantly though they have a strong brand and one that is in tune with the times. If any brewer can bring good quality, properly brewed ‘craft’ ales to the WKD and lager-swilling under-30s market, it could well be BrewDog.
Today BrewDog issued shares in the company as part of a plan to build a new brewery north of Aberdeen. They need to raise upwards of £2 million to build an energy self-sufficient brewhouse with many times the capacity of the current facility. It’s an ambitious expansion plan and one that reflects the market for craft brewing, which is growing despite the recession. The share issue, cleverly named ‘Equity for Punks’ is indicative of the current banking market; the company is raising money from small investors rather than asking the banks (though it is doing that too).
I am not a financial adviser of course and I’ve only skimmed the issue document but in all the excitement I suspect some investors are missing a few things. For one thing, BrewDog is not about to become a plc in the usual sense. Its shares will not be traded publicly on the stock market, though a trading scheme on the Equity for Punks website is in the works. Investors will share in any dividends that are paid out and–best of all in my view–get a 20% discount on BrewDog ales bought at the online store. In many ways this is a very Victorian way of raising capital, except that where information on private share issues used to be limited to those ‘in the know’ BrewDog has publicised its share issue online: you can hardly miss it.
The share issue was billed as a moment that would ‘change the face of brewing’ and I think it has that potential, but not because of the actual share issue part. BrewDog’s founders are in their mid-twenties and they realise that part of the success of craft brewing recently has been in local markets. They also realise that ‘local’ doesn’t have to mean what it meant 20 years ago; now it means Facebook friends and Twitter followers and whatever new community-driven service appears in the years to come. BrewDog’s strategy seems to be to make itself the Internet’s local brewer and to use its online store and the supermarkets to spread its products around the country.
So what about the investment? Buying shares is a risky business so if you’re serious it’s best to take advice and read the issue document carefully, but I suspect most investors will be buying the minimum of one share. For that you get 20% off at the BrewDog online store and membership of an online community. I’d be inclined to forget about the investment part and look at the £230 share price as a membership fee for an online beer club.