The maverick brewer is a different beast under new management, writes TERRY MURDEN
BrewDog famously battled for domination in the beer market with the behaviour of an out of control hound. Sneering campaigns aimed at the corporate establishment and the advertising authorities earned it a reputation as a maverick that drew an army of supporters ready to join the rebellion against the brewing giants.
Now the cockiness of its co-founders James Watt and Martin Dickie has been replaced by a more sober outlook on its future. The Aberdeenshire brewer and pubs chain has been reined in by the new management who have turned the focus away from gimmicks such as dropping stuffed fat cats over the City of London. Instead they are looking at the books and how to turn around a company that not so long ago was touted as a £2 billion flotation candidate.
Watt and Dickie each took a rumoured £50 million from the 2017 sale of shares to US private equity investor TSG Consumer Partners which engineered a deal that is likely to leave the other investors with very little. It requires BrewDog to deliver an 18% compounding return on TSG’s shares, creating growing pressure on the brewer’s finances.
The co-founders are no longer involved in the day-to-day running of the business which is now in the hands of chief executive James Taylor. He is grappling with continuing losses that have already led to 10 pub closures.
Confidential industry data now shows that BrewDog’s draught beers have disappeared from around 1,860 pubs over the last two years – cutting its UK distribution by more than a third. Its flagship Punk IPA has borne the brunt, with distribution slashed by more than half. In London, rival craft brands such as Camden Town and Beavertown are moving into its place.
The cancelled orders have come mainly from pub chains and large operators, and could not have come at a worse time. While some in the media were recently hailing a “return to profit”, this was only at the adjusted ebitda level. The company posted a pre-tax loss of £59m in 2023 and £30.5m in 2022, with Taylor conceding it will remain in the red.
Industry insiders say its deal with JD Wetherspoon’s 794 pubs has taken on extra importance, with one source saying: “If they ever lost the JD Wetherspoon deal, then that’s Punk IPA done as a [pub trade] product.”
BrewDog’s chief operating officer, Lauren Carrol, insists the latest move is part of a wider trend with pub groups narrowing their ranges, and brewery-owned pubs putting more emphasis on their own brands.
“It’s not just us – every independent brewer has been affected. We saw the trend coming, which is why we’ve shifted focus to high-impact channels like festivals, stadiums, and independents,” she said.
BrewDog rebranded its range
She and Taylor have rebranded the beers and swept out much of the Watt-era contrariness that some now regard as no longer helping its progress. The new approach is more in tune with a modern, sensible approach to alcohol consumption, better engagement with employees and a willingness to fit in with corporate convention.
When addressing investors on the Equity for Punks forum on 27 June, Taylor said: “Right now, the headline numbers do not make happy reading.
“Revenue and EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortisation] remain behind budget and last year. That underperformance isn’t across the entire business and there are areas of real momentum and solid fundamentals, but there are clear challenges in our Bars that have had a material impact on group profitability. Year-to-date, our group revenue is tracking c (9)% behind PY after a poor Q1.
“That said, there are positive signs that things are moving in the right direction, and I’m confident H2 will be meaningfully stronger.
“This coming month is a big one for the business as we look forward to welcoming thousands of Equity Punks on site for the 2025 Annual General Mayhem.”
The re-launch of the company began with the 2021 hiring of former Asda and Royal Mail chief Allan Leighton as chairman who came in to clean up the company’s tarnished public image, though problems have not entirely gone away and last year it was late filing its accounts.
As it tackles these new challenges, it hopes to put its latest setback behind it by expanding new beers such as Black Heart, Cold Beer, Shore Leave and Wingman which has seen it grow its share of the overall beer market to the largest it has ever been.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
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