It takes some nerve to mock Vladimir Putin, a former KGB agent and president of Russia. But poking fun at Putin over his homophobic comments in the run-up to the Winter Olympics - by launching a satirical beer that was ‘not for gays’ with a label that read ‘Hello, my name is Vladimir. I am 100 per cent hetero and will pass laws to prove it’ - saw BrewDog achieve notoriety on an international scale.
“I can never go to Russia now,” laughs CEO, co-founder and marketing mastermind James Watt. “I would get to immigration and whisked away in a van never to be seen again.”
Controversy has been a key ingredient in BrewDog’s success almost from its 2007 inception. Watt, a former fisherman, had started the craft brewer (based in Fraserburgh, Scotland) with schoolfriend Martin Dickie at the age of 24 with a mission to “spread the craft beer gospel”.
But it was the 2008 launch of Tokyo, a super-strength bottle with an abv of 12% (making it the UK’s strongest beer at the time) that first brought BrewDog to the public’s consciousness.
Attracting a slew of outraged headlines, Watt admits the storm of publicity generated by Tokyo was “accidental”. Now it’s very much by design.
“Conventional advertising is an outdated medium,” says Watt. “Times have changed. It used to be about how much TV you could buy, but the advent of social media means it’s now how intelligent and engaging your content is. And in that arena we can outgun the big companies. It’s also why we love Equity for Punks - it helps us from a finance perspective but it also builds a culture and community around what we do.”
Equity for Punks is BrewDog’s hugely successful foray into crowdfunding - it’s raised over £11m (and counting) across four rounds.
The pair turned to crowdfunding in 2009 due to “a lack of options”. It’s been a godsend, enabling BrewDog to grow sales at a rapid lick. Last year was its sixth consecutive year of record growth, with sales up 64% to £29.6m and profits rising 69% to £4.9m.
“It’s ridiculous the Portman Group can be seen as independent when it’s funded by the people that have an interest in keeping competition away from their brands”
“We could have had limited growth, because it’s a very capital intensive industry, or we could have sold large sums of equity to individual investors who just want a return,” says Dickie. “Or we could have used crowdfunding. And having 15,000 people with small stakes allows us to focus on making the best beer we can, rather than making a return for someone who doesn’t give a sh*t about the company.”
Even its use of crowdfunding has not been without controversy. BrewDog uses its own platform to raise cash from the crowd, so it isn’t bound by the FCA legislation introduced in 2014 to regulate crowdfunding.
Mistakes made in the paperwork sent out by BrewDog as it attempted to raise a further £25m from the crowd in April also offered critics - including the UK Crowdfunding Association - the chance to say ‘I told you so’.
“It was just our lawyers recommending we correct a couple of small mistakes,” says Watt. “And we wanted to do that, to make sure we are completely compliant.”
It’s also been questioned as to whether its IPA-loving investors take the time to understand the inherent risk of investment in their rush to snap up a minimum two shares for £95 (as well as equity, investors receive discounts in BrewDog bars and free beer on their birthday).
Perhaps the salient point is that amid the brouhaha, none of the punks spewing equity into BrewDog coffers seem to care, even if BrewDog is valued at a startlingly high £305m. Indeed, in the first 20 days since the latest scheme launched, it’s raised £5m. It still has 11 months to run.
“The response has been fantastic,” says Watt. “To see that many people believe in what we are doing and want to be part of the company was really exciting.”
“They are our biggest fans and biggest critics,” adds Dickie, a former brewer, who runs operations. “But they all love having a stake in BrewDog.”
In typically outrageous fashion, the duo celebrated the early success of their latest fundraising scheme a fortnight ago by flying a helicopter over the City of London and parachuting dozens of stuffed toy fat cats down on to the pinstriped suits below, “a symbolic gesture that heralds the extinction of the City fat cat… and showcased the viability of alternative forms of finance”. And if such stunts seem daft, make no mistake: BrewDog means business and its founders, now 32, are planning the future with serious strategic intent.
While a planned £1bn IPO by 2020 is not set in stone date-wise, there is a “very aggressive” plan, says Watt. “We want investors to be able to freely trade shares and make a return on the belief they had in us.”
In the meantime, sales are flying. The fastest-growing food and drink business in the UK, sales are expected to top £50m in 2015. It’s opened 27 bars since 2010 and last month it produced more than a million litres of beer, just over half of which is exported to 55 countries while 10% goes through its own bars. The balance goes through supermarkets and other retailers including Tesco, Sainsbury’s and Morrisons. According to Nielsen, Punk IPA is the biggest-selling craft beer in UK supermarkets.
The £25m it plans to raise in the next 12 months will be invested in solid infrastructure: a new brewhouse; investment in technology; and more bars (the priority is to open them in locations with a high concentration of Equity Punks).
The duo have even shown a natural flair for great PR in paying all of its 360 employees the living wage.
And what about the beer? It’s getting stronger. The strongest, End of History, came in at a barking 55% abv, though it was limited to 11 bottles (encased inside stuffed stoats costing £500 or inside a grey squirrel for £700). It’s also released a beer-based 35% abv spirit called WattDickie.
Is this responsible behaviour? “We are going to be the downfall of Western civilisation,” deadpans Dickie. “In all seriousness, our beers are the antithesis of the problem. If you sell super-strong lager at a ridiculously cheap price, that is designed to be abused. Our beers are designed to be drunk in small quantities. They are so flavourful you wouldn’t want more than a small quantity. And if it’s a bottle that took six months to make, and costs £30, at the end of the night you can share it between six people and have a good time. Why can’t you have a beer that is super-strong and drink it in an appropriate fashion?”
‘Brain dead zombies’
It’s also worth noting that not all BrewDog beers are super-strong. Its bestselling flagship beer, Punk IPA, is 5.6% abv. Strongbow, the UK’s bestselling cider, is 5%.
Such arguments don’t wash with the Portman Group, however. The drinks industry regulatory body, charged with the unenviable task of encouraging Brits to drink responsibly, takes issue with BrewDog on a regular basis, whether that’s over its high-strength beers, its provocative marketing or its licentious labelling.
A year ago, the Portman Group banned BrewDog’s relatively weak 3.8% abv Dead Pony Club pale ale after concluding the packaging, which included phrases like: ‘rip it up down empty streets’, ‘drink fast, live fast’, and ‘we believe faster is better’, encouraged “antisocial behaviour and rapid drinking”.
In response, BrewDog fired off a public missive branding the regulator “a gloomy gaggle of killjoy jobsworths, funded by navel-gazing international drinks giants. Their raison d’être is to provide a diversion for the true evils of this industry, perpetrated by the gigantic faceless brands that pay their wages. Blinkered by this soulless mission, they treat beer drinkers like brain dead zombies and vilify creativity and competition.”
Both men offer up something between a laugh and a sigh when asked how relations are between the two today. “They have always been amazing,” says Watt. “They occasionally send us a letter and sometimes we reply,” adds Dickie. “As an industry body it’s ridiculous it can be seen as independent when it’s funded by the people that have an interest in keeping competition away from their brands. It’s a silly organisation.”
Coming from BrewDog, that might seem hypocritical. It’s a brand with silliness in its veins. But BrewDog is actually deadly serious. And it terrifies the life out of the Portman Group and its members.
Fortunately relations between the two founders are more harmonious. Both men insist they have happily mixed business and pleasure since the age of 11.
“It’s pretty amazing that we haven’t had an argument since we started, but we both know what each of us is good at,” says Watt. “It’s really good,” nods Dickie. “The whole BrewDog team is getting stronger every year. And all of us are focused on making the beer better than ever.”
Martin Dickie: 32
James Watt: 32
Place of birth:
MD: Married, one child
JW: Married, one child
Best piece of advice received:
MD: If you believe in something, go with it. And don’t listen to anyone else
JW: Don’t listen to advice
How do you relax?
MD: I like walking the dog on the beach
JW: I drink beer
MD: If in doubt, don’t
JW: It’s easier to get forgiveness than permission
MD: Ken Grossman, CEO of Sierra Nevada
JW: Sir Tom Hunter, Scotland’s first billionaire businessman. He’s now a full-time philanthropist
MD: Standing inside a bottling line for years means that after work I enjoy absolute silence