Social Media Buttons

Description

WRITER, CONSULTANT AND BROADCASTER SPECIALISING IN BEER, PUBS AND CIDER. BEER WRITER OF THE YEAR 2009 AND 2012

What's new?

What's new?
New beer and music events added for Brighton - click here to book.
The possible rebirth of the British hop industry? My latest Publican's Morning Advertiser column
The 2014 Cask Report is out now. Click here to download.
>

Wednesday, 21 October 2009

The earth didn't move. But that's OK

In the end it was typical Brew Dog: a good, original, interesting idea, overhyped so ludicrously that the reality was a bit of a letdown, but having created enough debate and discussion to make you suspect this is what they intended all along.

If this blog is the only thing you've ever read on the internet, you may be unaware that yesterday, after teasing us for months, Brew Dog announced the launch of Equity for Punks, essentially an IPO offering fans of the beer the chance to own a tiny sliver of the brewery. The money raised by the share issue will finance the building of a new brewery.

It's certainly had a mixed reaction. The shares are stupidly overpriced - the 10,000 shares represent 9% of the total equity which, at £230 a share, would mean the brewery itself is worth around £23 million. It's not.

But that's not the point. I doubt Brew Dog will sell all 10,000 shares, but the people who are buying are buying something more than a 0.0009% stake in the most exciting brewery in the UK. The people buying are people who don't normally buy shares. They're buying this share because they want to align themselves with something interesting and iconoclastic, to be part of an adventure. Think of it less as a share, more like a T-shirt or badge saying "I'm one of these cool, interesting people who's part of this cool, interesting thing." And remember the lifetime 20% discount on the beers too.

Will I buy my share? Probably. The only thing I'll say though is that if the shares were a tenner each, I'd probably have bought £500 worth. Many Brew Dog fans won't be able to afford the £230 price of entry. There's an exclusivity here that's not very punk. It's actually going to be a stretch for me, but I don't want to miss the ride.

8 comments:

Jeff Pickthall said...

I felt squeamish watching otherwise level-headed beer-geeks get excited about this.

Much as I admire BD's marketing, watching adults wet their pants with excitement over this made me feel a bit nauseous.

Jeff Pickthall said...

I felt squeamish watching otherwise level-headed beer-geeks get excited about this.

Much as I admire BD's marketing, watching adults wet their pants with excitement over this made me feel a bit nauseous.

Tandleman said...

Mr P - I'm totally with you on this one. Now there's a thing!

James, BrewDog said...

Just a quick note on the £230.

The problem with making the individual shares cheaper is the huge transaction costs involved. If we had pitched the shares at £50 each, almost 50% of this would have disappeared in the various transaction costs (Official register, receiving agent, card fees, online check-out and the physical certification). In this case 50% of what people would have invested would have not helped us grow the business they have invested in which we felt did not make much sense for anyone, we do not want to waste your money.

What do you get for £230? A pretty cool brand with Martin, myself, Keith and Tony trying our heart out to turn this into a huge international success for everyone involved. I guess the question to ask yourself before investing is do you believe in the brand and the people behind it? Keith and Tony have a huge history of insane success (Skyy Vodka was sold for $1billion), the BrewDog brand is already internationally recognised and Martin and I are completely committed and dedicated to the future of the business.

Anyone - please feel free to email james@brewdog.com with any questions on the investment.

Bill H said...

James,

In the proposal you allocate the full 2.3M you hope to raise to your expansion plans.

If £25 per share will be for costs incurred during the transaction then you appear to have a shortfall of 0.25M.

All a bit muddy really.

Think I would rather spend £230 on a dozen cases of good beer to last me a year!

Good luck though.

Cheers

The Bocking Kellys said...

A footnote on Brew Dog - their beers were recently featured in a Sainsbury's bottled beer festival which finished about a month ago. My local Sainsbury's is now selling all that's left for £1 per bottle which includes lots of Chaos Theory, Dogma and one other.

James, BrewDog said...

Pete,

here is an indepth answer to some of the points you raised.

http://www.brewdog.com/blog-article.php?id=184

StringersBeer said...

Skyy vodka? That's a
well-known quality craft product. Not.

Didn't Campari pay rather less than 520 million for it? Still, that is a sh*t load of money isn't it?