BrewDog: How two men and a dog made a fortune from better beer

Frustrated at mass-market bland beers, James Watt, Martin Dickie (and a dog) turned their passion into one of the fastest-growing businesses and biggest breweries in Britain.

The best businesses often have the simplest beginnings. “Martin [Dickie] and I were bored of the industrially brewed lagers and stuffy ales that dominated the UK market,” said James Watt, co-founder of BrewDog. “We decided the best way to fix this undesirable predicament was to brew our own beers.”

So in April 2007, when the pair were just 24 years old, they started making and selling their own beers. They first brewed beer tiny batches, with bottles filled by hand, then sold it at local markets and from the back of a van.

The pair worked 20 hour days in a drafty warehouse on Scotland’s Fraserburgh coastline - but it paid off. The beer went down well at a series of open tastings and Watt and Dickie decided to concentrate on the business full-time.

For six months they lost money and went nowhere, then some samples they sent to Tesco led to a huge order. They needed to expand, and fast, if they were going to make a go of it but their bank refused to lend more cash to a start-up with just six-months’ experience and all of it loss making.

Refusing to give in – and as they still had their suits on – they changed their business pitch and went next door to a different bank. It worked. They got their money, bought equipment and had a working plant a whole two weeks before their first shipment to Tesco was due.

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Six years later and they have a new brewery, 135 staff, a multi-million pound turnover, have pioneered a new way of raising money and are exporting their beers across the world. And – despite a storm of controversy – they’ve done it their way.

James Watt and Martin Dickie at their new brewery
A storm brewing

BrewDog certainly has a unique way of going about things. First there’s the provocative marketing which has gained the company substantial international coverage.

“We have a terminal addiction to make beers we want to drink. Beer with teeth and balls. Beer we lust for. Crafted beer,” the BrewDog website reads. “Experimentation is our Art. Revolution is our weapon. And revolutions aren’t made on formula. They just rip the t**s off convention.”

The website, product packaging and advertising slogans continue in the same vein.

BrewDog prides itself on making all its beers from fresh natural ingredients; using no preservatives, additives or pasteurisation. It also likes to make really strong beers.

In 2008 the brewery masterminded the UK's strongest ever beer, Tokyo. Its sale resulted in a huge media storm with the alcohol marketing watchdog, the Portman Group, criticising the manufacturing and marketing of such strong beer.

The spat is one of many between the controversial brewery and the watchdog. Portman also accused BrewDog of breaking its marketing code by the way it advertised three of its most popular beers; Punk IPA, Hop Rocker and Riptide.

Punk IPA was described on its label as an “aggressive beer” while Hop Rocker was marketed as including “nourishing foodstuff” with its label reading: “Magic is still there to be extracted.”

BrewDog was cleared of breaking the rules but continued to launch ever-stronger beers and lay claim to the 'strongest beer ever brewed' accolade, ignoring previous controversy.

BrewDog's Tactical Nuclear Penguin - at 32% ABV - was the world's strongest beer when launched in 2009

Other PR stunts include everything from packaging beer in stuffed stoats, dressing dogs in sailor suits and Watts and Dickie projecting naked images of themselves on to the Houses of Parliament.

The controversy and outrage are all part of BrewDog’s business strategy – and it works. Like its beers, the brewery has gone from strength to strength.

By 2009 BrewDog had to install huge new tanks outside its Scottish brewery to try and keep up with the demand for its beers. Punk IPA became the UK's fastest growing alternative beer brand and the top selling IPA in Scandinavia.

As well as manufacturing and exporting beer, BrewDog also has opened bars in around the UK in which it promises to offer “No Carling. No Tennents. No shots. No b*******t - just good honest beer.”

BrewDog currently runs 11 bars across the UK and plans to open more here and overseas

No more relying on banks

In 2009 Watt and Dickie effectively gambled the company’s future by launching the innovative “Equity for Punks” scheme and becoming a public limited company (PLC). Under the scheme shares in the company were sold online in a scheme fully authorised by the Financial Services Authority.

Beer lovers responded enthusiastically and more than 1,300 people invested in what BrewDog calls its “anti-business business model”, raising £700,000.

The second phase of Equity for Punks (“Equity for Punks II”) was launched in 2011 and raised more than £2.2 million from more than 5,000 new shareholders. Enough to build their new, state-of-the-art brewery.

BrewDog claims Equity for Punks offers investors a huge return-on-investment while benefiting from a host of special offers including a lifetime discount in all of its bars as well as discounts when buying beer online.

Brewery hosts annual general meeting for thousands of new investors found through its Equity for Punks scheme

No sign of stopping

The business model appears to work. BrewDog has been the fastest growing brewery in the UK for four years running and more share sales in the future have not been ruled out. For investors, there are also the company’s legendary AGMs to attend where shareholders are offered beer tastings, rock bands and mosh pits.

Its 2012 AGM reported a turnover of £5.92 million (up 77%) and pre-tax profits of £425,000 (up 92%). The 2013 AGM, scheduled for 22 June in Aberdeen, promises to be a riotous affair.

Meanwhile the controversy continues. As well as routine clashes with Portman, BrewDog forced drinks giant Diageo into a public apology last year after exposing it for using "dirty tricks" to manipulate the results of an awards ceremony.

The row concerned a dinner in Glasgow organised by the British Institute of Innkeeping (BII) Scotland, a trade body representing pubs, restaurants and other licensed venues.

BrewDog mounted a Twitter campaign after it emerged that Diageo threatened to pull its sponsorship of an awards ceremony if BrewDog won.

As for what’s next for BrewDog, the beer revolution and quest for world domination have only just begun. “Those stupid little gunsel corporate freaks think they got us fooled with their tasteless, mindless, visionless c**p,” its website reads. “Walk tall, kick a** and learn to speak craft beer.”