For those who have wondered about whether or not BrewDog has had a sustainable business model, it appears they do: “BrewDog Releases Annual Report, Acquires Draft House Pub Scottish craft brewery BrewDog has released its 2017 annual report, which was highlighted by 55 percent revenue growth, to more than $155 million dollars. “We are forecasting further strong revenue growth for 2018 as we take advantage of a full years production from our Columbus brewery, continued international expansion and further strong UK revenue growth in both the on-trade and off-trade channels,” the company said in the report. According to BrewDog, the brewery has averaged 63 percent annual growth over the last six years while its average annual operating profits have grown by 76 percent during the same period. BrewDog said Punk IPA now accounts for 60 percent of sales, followed by Dead Pony Club (11 percent of sales) and Elvis Juice (9 percent). The company also listed other 2017 highlights, including the opening of its first U.S. brewery in Columbus, Ohio and raising $7 million in an Equity for Punks USA crowdfunding campaign. In other BrewDog news, the company acquired the Draft House pub chain, according to the Telegraph. In addition to the the 33 pubs it currently operates in the U.K., and its 17 worldwide locations, the acquisition gives BrewDog 14 Draft House locations in London and South East England.” https://www.brewbound.com/news/pres...17-federal-judge-rules-brewery-go-sales-texas
Exactly, you guys know the deal. This is not "strong growth" in the traditional "craft" sense of the word. How many other craft brewers do you know have raised over one hundred million dollars from private equity firms and other crowdfunding ventures? There aren't any. To get a better idea of how they are doing, look at ROIC (return on invested capital). Once you do that, you'll see that if they are not growing at 50% every year, they are hemorrhaging.
I have no opinion about Brewdog's beers and won't until I taste one. As for the rest were I a man completely devoid of moral scruples and crowd funding had been around 40 years ago I'd be so rich now you guys would've never met me.
Shane, I am not an expert on corporate finance so I am hoping that you can help me better understand: Crowdfunding You are correct that BrewDog is a fan of obtaining investment via crowdfunding. In their annual report they indicates that in 2017 they obtain $7M of US based investment and £10M of UK based investment. Is there a downside to BrewDog to obtaining investment in this manner vs. by other means (e.g., bank loans, etc.)? You made mention of ROIC but nowhere in the annual report did I see this metric listed (very likely I just missed it?). Can you further educate me on why the means in which BrewDog solicits investment (i.e., crowdfunding) yields that they need to grow at a rate greater than 50%? Thanks in advance for your help here. Cheers! Jack
One other piece of information that I gathered from the 2017 Annual Report is that they identified a site in Australia (Brisbane) to open another brewery. They state this brewery will launch in 2019 to serve Australia and “other neighboring markets”. I am guessing that “other neighboring markets” means Asia. Cheers!
Revenue is up. It better be given the capital influx and expansion plans. 2017 profits were down significantly from 2016 profits due to higher cost of goods sold, administrative expenses and increased financing costs. They’ll be successful if they can grow into themselves. I don’t see how the source of capital makes a difference. You could argue crowdfunding is less sticky, but the majority of capital raised in 2017 came from TSG Consumer whose investment thesis is based on continued global expansion. They have a ton of liquidity right now. How they invest the cash and the return they generate will make the difference. The revenue growth headline is just that: a headline.
Apparently TSG Consumer invested $124 M in BrewDog in 2017: “Scotland-based, independent craft brewer, BrewDog, today announced that TSG Consumer Partners has acquired approximately 23% of the company, in a $264 million[2] transaction including $124 million to fund BrewDog's continued global expansion, and the balance of proceeds to provide for early shareholder liquidity.” https://www.brewdog.com/usa/lowdown/press-hub/tsg-deal-2 Cheers!
But you've not identified who the "suckers" might be. Is it those who invested or those who didn't....
TSG also is a major investor in a US brewing (sic) company - though they don't have much to say about it on the TSG website: If a "diverse portfolio" consists mostly of contract-brewed AAL's with different "heritage" brand names that all taste similar (and, in some cases, are the same beer). Another large shareholder (and director) of Brewdog is Keith Greggor - of The Griffin Group (formerly of Skyy Vodka fame), one of the two short-termed owners that recently sold Anchor Brewing Co. to Sapporo.
"A fool and his money soon part". Or as the crow said, "If it's shiny I want it!". Audacity seems to still be marketable. Anyway, more power to them. Columbus was an unusual spot for a North American outpost, but it does seem to have been a good decision.
Apparently, Columbus was recommended to them by Greg Koch - it was one of Stone's "also-ran" sites for their eastern brewery:
Thanks. I've always loved Columbus.It is honestly a big and little city at once. The dorm (OSU) with the walkway into the football stadium was amazing.
