News BrewDog Admits Talks to Sell Almost 1/3 of its Business

Discussion in 'Beer News & Releases' started by herrburgess, Mar 16, 2017.

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  1. herrburgess

    herrburgess Meyvn (1,010) Nov 4, 2009 South Carolina
    Industry Beer Trader

  2. HouseofWortship

    HouseofWortship Aspirant (270) May 3, 2016 Illinois
    Beer Trader

    I'm really interested in how this is going to play out. Have the Equity for Punks donors essentially donated millions so the Brew Dog owners can cash out via IPO? Or will the Equity for Punks donors get something out of the IPO. They currently aren't entitled to anything. This could essentially be Brew Dog owners essentially taking millions in gift money for the company and cashing it out as their own stock.....
     
  3. cg123

    cg123 Initiate (138) Feb 27, 2012 Ohio

    I don't know much about the finances of BrewDog and their "Equity for Punks" shtick always rubbed me the wrong way, but I visited their Ohio brewery last week and that place is amazing. I got a behind the scenes tour, and although they are not brewing yet, that place is straight up impressive. They are going to be cranking out a lot of beer out of that place once up and running. Their 200 HL brewhouse will have the capacity to brew 12 batches in a 24 hour period. That's insane. It will be interesting to see how well received they are once locally made BrewDog beers hit the shelves.

    The taproom was pretty sweet as well.
     
  4. Ranbot

    Ranbot Devotee (437) Nov 27, 2006 Pennsylvania

    How well US-made BrewDog beers are received is the $31+ million question. With the recent sharp rise in competition in the US craft beer market it doesn't surprise me BrewDog is exploring ways to spread the risk of this brewery investment around.
     
    cavedave, KevSal, SJeffery and 2 others like this.
  5. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    Is there a target date for when the brewery will go operational?

    Cheers!
     
  6. CassinoNorth

    CassinoNorth Disciple (304) Apr 5, 2013 New Jersey
    Beer Trader

    Wouldn't be surprised if it ends up being a 2/3rds contract brewing facility.
     
  7. zid

    zid Crusader (789) Feb 15, 2010 New York
    Beer Trader

    I don't know what the percentage is but they do some contract work in the UK.
     
  8. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    Which breweries have such high demand for their packaged beers that they will require a 'new' brewery (BrewDog in this instance) to produce their beers?

    Cheers!
     
  9. cg123

    cg123 Initiate (138) Feb 27, 2012 Ohio

    They hope to be brewing test batches in early April.
     
    JackHorzempa likes this.
  10. CassinoNorth

    CassinoNorth Disciple (304) Apr 5, 2013 New Jersey
    Beer Trader

    Throw a dart at the map...you'll hit a small brewery that doesn't have as much supply as they do demand for their product.

    Just as Carton, Stillwater and Evil Twin use Two Roads to brew their stuff...it has to be a comforting feeling knowing beer you're putting your reputation on is coming out of a craft brewery.
     
    KevSal and drtth like this.
  11. HouseofWortship

    HouseofWortship Aspirant (270) May 3, 2016 Illinois
    Beer Trader

    Maybe the next logical step to join the big boys (InBevs/Constellation/etc.) is for Brew Dog to start buying some undervalued existing craft brewers and then use excess capacity in the new facility for ramping up those beers?
     
    KevSal likes this.
  12. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    FWIW, what you suggested there makes more sense to me than BrewDog thinking they will be able to sell a lot of their beers in today's very competitive distributed craft beer market.

    I suppose in a year or two (or three) we will see.

    Cheers!
     
    KevSal likes this.
  13. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    The entire Columbus venture has always seemed very risky to me. There's lots of money and lots of promises floating around out there. Sounds like some CYA thinking to me.
     
    JackHorzempa likes this.
  14. Ranbot

    Ranbot Devotee (437) Nov 27, 2006 Pennsylvania

    Or contract brew for others. As craft beer markets get more competitive it would make sense that brewers weighing the cost/risk of expansion would also consider contract brewing as a less risky option. There also seem to be relatively few contract brewers compared the total number of craft brewers, although I have no idea what the unused capacity (and in turn competition) among the contract brewers is currently like. (Maybe @jesskidden knows or can make a more educated guess?)

    And while we're speculating.... if BrewDog went the contracting route, unlike most contract brewers they could sweeten the deal by offering to carry the contract brewed beer in their network of BrewDog restaurants/pubs. Win-Win.
     
    drtth likes this.
  15. westcoastbeergeek

    westcoastbeergeek Aspirant (253) Sep 16, 2015 British Columbia (Canada)
    Beer Trader

    For a brewery that's been so fiercely independent and talkative about it, this is quite interesting.
     
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  16. belvedere86

    belvedere86 Initiate (188) Apr 1, 2013 Belgium
    Beer Trader

    I don't get it why they started a brewery in the USA. Their stuff is good but there are a ton of American IPA's I prefer above their flagship beers like punk IPA or deadpony.
     
    winehead247, JackHorzempa and jmdrpi like this.
  17. jesskidden

    jesskidden Meyvn (1,246) Aug 10, 2005 New Jersey
    Subscriber

    Well, there's 9 million barrels of excess capacity sitting unused in Eden, NC - that's enough to brew all the beer sold by the 97% of the US breweries under 100k barrelage (well, using the 2015 TTB figures).

    (I was just thinking about this when I read where NC officials are trying to get the Feds to force ABInBev to sell that empty brewery - I would have thought that Molson Coors' US subsidiary MillerCoors still owns that real estate? Still, the only US company that could use that sort of capacity for their own brands is Pabst, but the brewery does have the ability to brew "craft" beer [all malt, kraeusening, pelletized hops, etc] - it was home to some Samuel Adams and Wicked Pete's barrelage in the 2000s).

    As for other large contract breweries, I doubt City is anywhere near capacity at its Lacrosse or Memphis breweries which once were rated at around 5-6 million barrels each (Latrobe was much smaller), nor is Genesee. Now, those Macro-sized breweries crank out more beer in one batch than most "craft" breweries can handle but there's lots of smaller (under 1m bbl capacity) contractor brewers offering a more "hands on" or "alternating proprietorship" deals, starting with Cold Spring and F X Matt and then working your down to the new capacity added by some recent start-ups - Susquehanna, Brew Hub, Two Roads, etc.
     
  18. JamFuel

    JamFuel Meyvn (1,129) Mar 26, 2009 Sweden

    Brewdog have always puffed out their chests about being their own, and have stopped selling beer from breweries that have sold to majors (Camden for example) at their bars, and also called off collabs because the other party has been bought up. So this seems a bit hypocritical to me, unless they mean for the new stocks to be bought by regular people. The article makes it sound like they're looking at major companies, though.
     
  19. jesskidden

    jesskidden Meyvn (1,246) Aug 10, 2005 New Jersey
    Subscriber

    Well, they sold a minority share (around 10% IIRC) to Griffin Group's owners, before they bought Anchor Brewing Co.
    Eventually, Anchor took over the import/distribution rights for Brewdog, which they have announced they'll relinquish once the Ohio brewery is operational.
     
    zid likes this.
  20. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    I've been following N.C. Attorney General Josh Stein's campaign to get the Eden plant up and running. My first thought was "Who?". It's a very large brewery, way too much for anything but the likes of Pabst. That Stein (a Democrat) and Phil Berger (arch conservative Republican) are working on this together is a story in itself...But the Eden plant is in Berger's hometown. It would be some kind of miracle for the Eden brewery to be back in production in this new world of consolidation. This is why it was closed in the first place.
     
    JackHorzempa likes this.
  21. Ranbot

    Ranbot Devotee (437) Nov 27, 2006 Pennsylvania

    Heineken also comes to mind. They own many breweries all over the world, but none in the US [or Canada], however they own many nearby breweries/brands in Latin America.
     
  22. drtth

    drtth Poo-Bah (3,005) Nov 25, 2007 Pennsylvania

    Possibility, but they may be preoccupied with their new half ownership of the three Lagunitas breweries and working out plans for Lagunitas international distribution. Still, that would give the "partnership" lots of increased capacity if they could digest it.
     
  23. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    That would be perfect. Trained work force, bountiful and very good water, a mostly ready to go facility, low taxes, even though unionized (at the Miller brewery), labor in Rockingham County is cheap, and the area is beautiful. Also, Greensboro and Winston-Salem are nearby. Hope springs eternal!
     
  24. donspublic

    donspublic Meyvn (1,175) Aug 4, 2014 Texas
    Beer Trader

    For some odd reason in my mind I thought that Constellation Brands would snatch up that brewery for Ballast Point and more production of their Mexican brands, but seems they decided to open another brewery in Mexicali.
     
  25. Ranbot

    Ranbot Devotee (437) Nov 27, 2006 Pennsylvania

    The possibility of a US import/border tax discussed by the current administration could also be a consideration for a brewer who exports to the US, like Heineken. Large brewing operations typically run on slim margins and likely have less flexibility to raise prices or absorb a tax. (Simply stating facts; no political opinion or judgment intended.)
     
    rgordon likes this.
  26. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    Brave new world. We'll see. If worse comes to worse it could be re-purposed as a "Belgian" brewery to historically brew Budweiser American Ale and Michelob Dark in a "dormant" Miller brewery. One of a kind!
     
  27. Crusader

    Crusader Initiate (190) Feb 4, 2011 Sweden

    Their Punk IPA and Dead Pony Club are perfectly enjoyable APA type beers (though I suspect the average BA would think of them as too mild, or even bland), but if a brewery like Sierra Nevada is having trouble with their sales I have to wonder if the market is clamoring for large volumes of approachable craft beers from a singular brewery. If the project is scalable with modest initial projected volumes then I could see it as an interesting albeit risky venture, but from what I've read it looks like they will put the cart before the horse, a full sized production brewery scaled for serious production from the start (with, I assume, profitability dependent on those production levels being achieved fairly quickly). But then again, perhaps this is why I don't own a business or am expanding its reach to another continent :stuck_out_tongue:.
     
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  28. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    Patrik, I have been posting for quite some time that considering the very competitive business environment for distributing craft breweries in the US right now that BrewDog's decision to open a production brewery now is a very risky business decision. Needless to say but these numerous posts did not influence the decision to proceed with this production brewery.

    I suppose we will just have to wait and see what happens with respect to the sales volume of BrewDog beer in the US. I could envision a bit of 'good' sales initially since there could be some allure of the 'new' guy brewing craft beer but I suspect that maintaining continued robust sales will be a very big challenge. I just do not see what 'discriminator' that BrewDog brings from a beer perspective. Maybe they have some ideas to 'broaden' their product range here?

    Cheers!
     
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  29. Crusader

    Crusader Initiate (190) Feb 4, 2011 Sweden

    Agreed. If sales were booming for them already in the US I don't see how they couldn't simply rake in the profits through a growing export business (brisk sales aiding in keeping stocks fresh) instead, and if it isn't, then what need is there for a brewery?, is the question I'm asking myself.

    The discriminator issue is also interesting, since by moving production to the US they are removing the one discriminator they have going for them (the allure of the import). There's a myriad of American craft breweries which can offer the edgy, counter culture image/imagery that Brew Dog is using as part of their brand. It might work in Europe where there is less competition (so far, relatively speaking) in this respect, but in the US they will be going up against some pretty savvy marketeers.
     
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  30. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    I truly do not wish anything bad for anyone, but BrewDog's general allure to the broad craft market is limited at best. As you say, an initial spike in sales and some real excitement about trans-national brewing audacity may be heartening, but sustaining their brand-building across the US will always be a very tough task. Going big is ballsy and more power to them.
     
    JackHorzempa likes this.
  31. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    Patrik, the only other guess/thought here is that BrewDog thinks there is enough business opportunity for selling their beers in the Columbus, Ohio area? They could market themselves as Columbus' brewery and capture much of that area's craft market?

    This may be a poor guess since I have no idea whether there is an 'under-served' craft beer market in the Columbus, Ohio area.

    Classically distributed craft breweries depended on a larger area (regional or national for a few of the larger craft breweries) to fulfill their business plan. Maybe BrewDog has an idea(s) on how to be profitable via a unique marketing strategy?

    Like I posted previously, I suppose we will collectively have to wait and see how this plays out.

    Cheers!
     
    Crusader likes this.
  32. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    Dick, I agree with you there.

    As you will read above I suggested that maybe BrewDog has a unique marketing plan/idea for this brewery?

    Cheers!
     
    rgordon likes this.
  33. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    I hope they do..... I was just walking the dogs and a truck went by with Ward York Yard Work signs on both sides. That made my day! Sorry, I had to share that with someone.......
     
    JackHorzempa likes this.
  34. HouseofWortship

    HouseofWortship Aspirant (270) May 3, 2016 Illinois
    Beer Trader

    Maybe it's just a tax shelter...
     
  35. drtth

    drtth Poo-Bah (3,005) Nov 25, 2007 Pennsylvania

    Here's a bit more information about the BrewDog growth plan, some interesting points about how bit they are already, and the status of what seems to be happening at the moment. (Except for discussions of selling of part of the company to investers other than those buying a chunk through equity for punks.)

    http://www.lancastereaglegazette.co...anal-winchester-beer-dining-brewery/97856592/

    Also a bit of additional food for thought.

    The Green Bay Packers have something like about 250,000 owners with holdings in stock that does not pay dividends and is not sold in any stock exchange.
     
    Crusader likes this.
  36. rgordon

    rgordon Defender (693) Apr 26, 2012 North Carolina

    But, BrewDog doesn't have a history rife with the likes of Bart Starr, Jim Taylor, Paul Hornung, Max McGee, Willie Wood, Jim Ringo, and Brett Favre. Those were some thermo-nuclear cheese heads right there! And I was a Baltimore Colts fan......
     
  37. HouseofWortship

    HouseofWortship Aspirant (270) May 3, 2016 Illinois
    Beer Trader


    Not analogous at all. Packers are basically a fundraiser for locals and fans to keep a city service going where as Brew Dog is just a corporate cash grab.
     
  38. drtth

    drtth Poo-Bah (3,005) Nov 25, 2007 Pennsylvania

    True. But the point of the parallel was that sometimes folks have a reason for investing other than the profit motive.

    (Also, once upon a time the Packers hadn't had Vince Lombardi to coach them. Brewdog has not been around yet as long as Green Bay had been by the time he took on the job. :slight_smile:)
     
    #38 drtth, Mar 20, 2017
    Last edited: Mar 20, 2017
  39. drtth

    drtth Poo-Bah (3,005) Nov 25, 2007 Pennsylvania

    The Packer's national advertising campaign announcing their most recent round of stock sales was every bit as much of a cash grab and they made no bones about wanting the money for a variety of things. Similarly the BrewDog offering involves making an investment that promotes the local services and economic well being of the small Ohio town where they are located.
     
  40. JackHorzempa

    JackHorzempa Poo-Bah (2,933) Dec 15, 2005 Pennsylvania
    Supporter

    Tom (@drtth), thanks for that link.

    I took note of:

    “McDowall said the goal is to produce 50,000 to 80,000 barrels of beer this year at Canal Winchester.

    "But we have the capacity to do more than 10 times that," he said. "So we hope to be brewing half a million barrels at this facility in the years ahead."

    The company will first distribute its beer only in Ohio but plans to distribute nationally in the next year or two.”

    So, it appears that this brewery will have the capacity to brew 500,000+ barrels of beer a year. That is a lot of capacity!!

    If they need to sell something like 500K barrels of beer a year to be profitable, they have quite the Marketing & Sales challenge before them.

    Cheers!
     
    Crusader likes this.
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