BrewDog saga leaves a sour taste
Added: Wednesday, July 7th 2021
It was all going to be so refreshingly different – a brewery turning its back on “industrial lagers and stuffy ales” and offering bright new beers for young people dubbed punks. That was the promise made by James Watt and Martin Dickie when they launched BrewDog in 2007. They funded their growth with repeated crowd funding exercises called Equity for Punks, raised millions and eventually opened bars throughout this country as well as in Las Vegas, Tokyo, Shanghai and Brisbane. They bought a brewery in Berlin and two more are planned in the United States and Australia.
BrewDog is valued at £2 billion but this success has been seriously damaged by revelations about how employees are treated at the giant brewery at Ellon near Aberdeen, where 220,000 hectolitres of beer are produced annually.
In June, 250 former members of staff, calling themselves Punks with Purpose, published an open letter in which they accused Watt and Dickie of creating a “rotten culture that damaged their mental health”. They said a policy of “growth at all costs” compromised health and safety, and there was a “toxic attitude” to junior members of staff.
They also criticised the founders of pursuing “vanity” public relations stunts, such as dropping stuffed animals from a helicopter over the Houses of Parliament and Watt and Dickie greeting visitors to the brewery dressed as penguins.
CAMRA knows about such stunts. In 2011, BrewDog applied to rent a stand at the Great British Beer Festival at Earl’s Court in London. Hiring Earl’s Court is extremely expensive and the Campaign has a long-established agreement with companies renting stands to pay in advance of the festival.
In 2011 everyone complied with this policy – except BrewDog. They were sent a series of friendly reminders without response until on the eve of the festival they were told they couldn’t have a stand as they had breached the agreement. BrewDog then put out a press statement saying CAMRA had “expelled” the brewery from GBBF. That was almost certainly the aim of the operation all along – to win some cheap publicity and damage the good name of the Campaign.
BrewDog has moved a long way from its founding mantra that it would be radically different to traditional breweries that are funded by rich investors who control large parcels of shares. The 145,000 punks who invested more than £80 million would rule the roost at BrewDog.
It therefore came as a profound shock in 2017 when a quarter of BrewDog’s shares were sold to two companies based in the most infamous of tax havens, the Cayman Islands. One of the companies, TSG Consumer Partners, now controls 22.3 per cent of BrewDog’s shares. The deal between the brewery and the investor means TSG has priority over all other shareholders when important decisions are taken, such as BrewDog seeking a listing on the Stock Exchange. How very punk!
The managing director of TSG, Blythe Jack, has been appointed chairman of the BrewDog board in the wake of the furore over the Punks with Purpose revelations.
Another major shareholder is John Moynihan, who chaired the finance committee of the Vote Leave organisation during the Brexit campaign. Moynihan also donated £100,000 to the Conservative Party during the 2019 general election. He owns 7,142 shares. Such a source is a long way removed from the attitudes of the small investors who were impressed with BrewDog’s punkish origins – all beards and bobble hats -- and the promise to be outside the mainstream of a notoriously conservative brewing industry.
James Watt has apologised to Punks with Purpose and says he will ensure that staff are better treated in future, with due regard for their mental health. Blythe Jack will oversee the way staff matters are handled. Whether this will appease small shareholders remains to be seen.
BrewDog received a £25 million loan from the government’s Covid Business Interruption Scheme. With many pubs and small businesses facing a difficult future, with the end of rent and rates “holidays”, did a company as cash-rich as BrewDog deserve such largesse?
It’s a sad and sorry saga that leaves the beers from Ellon with a very sour taste.
•First published in What’s Brewing, July 2021. Photo of James Watt and Martin Dickie courtesy of the Morning Advertiser.