After All That Crowdfunding BrewDog ‘Punks’ Get Chance to Sell Nice Profit
The brewery is getting an investment from the company that owns Pabst.
Even an adamant critic would be hard-pressed to say that Scotland’s BrewDog—tagline: “We brew hardcore beers for punks”—didn’t start out with a punk rock mentality. In 2007, the brewery launched in one of its owner’s mother’s garages. From there, the company forged much of its massive growth through the vocal and financial support of its fans. Starting in 2010, the brand began using crowdfunding as a way of getting grassroots investments from its drinkers—a group they called “Equity Punks.” However, today, BrewDog announced it’s taking a much different cue from the music world: selling out—sort of. But unlike a garage band’s ravenous fan base, these “punks” could stand to make a sizeable profit from this mainstream turn.
San Francisco-based private equity firm TSG Consumer Partners, which, among many investments, also owns the brewer Pabst, has agreed to buy 22 percent of BrewDog based on a £1 billion valuation for the only 10-year-old brewery. Though it’s believed owners James Watt and Martin Dickie will make about £100 million between them, the brewery’s independent Equity Punk investors, a group that is nearly 50,000 strong, are all expected to see significant profits as well. Of the four rounds of crowdfunding that took place, the initial group stands to make a return of about 2,800 percent. Meanwhile, even the most recent investors who bought in last year will supposedly see a return of 177 percent if they choose to sell. Reportedly, all punks will have an opportunity to sell up to 15 percent of their shares (capped at 40 shares per investor) next week.
For its part, BrewDog took the “selling out” accusation head-on, putting this deal in the context of what is happening in the brewing world at-large. “Assumptions might be made about BrewDog ‘selling out,’ but this couldn't be further from the truth,” the company wrote on its website. “We have taken on a minority investment partner, just like we did with The Griffin Group back in 2009. Martin and myself (James) still control the company, and remain the largest shareholders. Other great craft brewers like Stone Brewing Co. and Dogfish Head also recently took on minority investment deals, which are very similar to the deal we have just concluded.”
Regardless of how you feel about minority equity investments, in recent years, BrewDog has been about as punk as Green Day: That is to say, the brand’s beers still feel true to their original intensions, but the scope of the company has left those indie days in the dust. The brewer now has nearly 1,000 employees, has opened brewpubs around the world including places like Hong Kong and Sao Paulo, and is about to open a massive brewing complex in Ohio that will even feature a beer hotel. The truth is that punks do grow up and priorities do change. I think if you offered all of us who bought Dookie a return of 177 percent on the price of their CD, I think we’d all take it.