Tuesday 1 December 2009

Why I invested in BrewDog

It was a knee jerk reaction I'll admit. Strung along by viral marketing and perhaps influenced by a couple of neuron annealing pints. At that time, in the early hours of the morning on the 20th October, I knew I was highly likely to be one of the first to invest in BrewDog's share scheme. The announcement wasn't supposed to happen until 7am. As it turns out I was the very first to take up the offer.

I can almost sit back now and wait for all the crazy publicity stunts that James and Martin think up. Complaining about their own beer to the Portman group I thought was interesting. I have a low opinion of any industry self regulator, being a small and diverse business I see plenty of it about across several industries, run by big boys as damage limitation exercises in every single case. I nearly jumped to James' defence on that occasion, but it seemed he needed no help. What publicity it created everybody telling him that he'd gone too far this time. A couple of apologies from James later and all was forgiven, publicity worked, job well done.

Of course they do best when they produce something interesting in the beery way of things. Tokyo* was fantastic. It's not a beer that everyone gets the point of. I sell it here and it gains mixed responses. Some love it, some try it and don't like it and some just can't see the point of a beer you can't drink a gallon of. Interestingly, litre for litre, it is a similar price and alcohol content to port wine. So why the Portman group took the bait in the first place completely stuns me.

But then we get Tactical Nuclear Penguin. This is a laugh from start to finish. If you haven't done so yet, watch the video before reading any more.

Now, did you like that? No? Oh dear, you really have no sense of humour have you? It is possible of course that this beer tastes foul. I haven't tried it yet and I am unlikely to do so at a price tag per volume greater than that of a good cask strength malt whisky. But I love the concept. Sure, we can question if it is really beer, but that is missing the point. It's been matured as a stout for 18 months before they start freeze distilling making it a smooth delicious beer, apparently. It's clearly not been made to hit the binge drinkers any more than conventional high quality distilled drinks like brandy for instance.

I'm not sure if it is good etiquette to criticise a fellow beer writer, but I was astonished at Roger Protz assessment of the drink. Perhaps Roger himself is courting controversy or perhaps he believes what he is saying. Either way the response in the comments on his post would suggest that the beer blogging world disagree with him quite a lot. I feel a little bit of sympathy for him having lost touch so much with what is now becoming quite progressive in the beer world. Roger is a solid supporter of the classic, traditional British pint of cask, perhaps it would be unreasonable for him to take any other stance.

However, are we not a select few in the beer blogging world? I know the vast majority of my customers, if Tokyo* is mentioned, declare it not to be beer. What will they think of TNP? Not a lot I should think. Roger represents the view of the majority of cask beer drinkers I suspect, misguided I know. My point here is that it doesn't matter to him or to us. BrewDog want to get to us, the beer fanatics who love the things that they do. Roger played right into this plan and as one astute observer wrote "Could you play your scripted part with any more precision?" That's why I have no worries about my investment in BrewDog, because all publicity is good publicity for them.


HopZine Rob said...

Yeah BrewDog are brash but it's good to see them experimenting with different brewing techniques and flavours.
BrewDog are just doing their own thing in their own way which makes them a bit of a target.
I need to try Tokyo*!

-Matt (hopzine.com)

Reuben Gray - TaleOfAle said...

Having had Tokyo* with Dave no less, I am now very interested to try TNP. I love my whiskey as well as beer so having something like this could be very interesting.

Tandleman said...

I think Roger spoiled his case by getting his facts wrong. OK - he pissed on his own chips. After that he was lost and any serious points were unlikely to be taken on board.

Brew Dog are an interesting mob and no mistake, though I'd take issue with "BrewDog want to get to us, the beer fanatics who love the things that they do. " They don't need a big new brewery to do that. They already have most bloggers fully hypnotised. Brew Dog, sooner or later though, will have to widen their appeal, depend less on gimmicks and settle down to selling beer in the volume their new brewery - assuming it is built - and its commitments will demand. It's just a question of when.

In the meantime, more cask please. They are usually pretty good and that's where my road of enlightened self interest will always lead me.

John West said...

Tandleman's right: 'I think Roger spoiled his case by getting his facts wrong.'

He did. It was very poor journalism which might have been *slightly* excusable if he'd tasted the beer and disliked it so intensely he wanted to write a knee-jerk hatchet job.

As he hadn't, it just read like the outpourings of those cabinet ministers in 2001 who claimed to be outraged at Chris Morris's Brass Eye paedo special and then had to admit they hadn't seen it.

Ed said...

Does buying shares worth about 20% of what you’ve paid for them really count as an investment? Wouldn’t it be more accurate to say you’ve officially joined the brewdog fan club?

Cooking Lager said...

And there was me thinking you just liked to buy 10p pieces for a quid, Wooly

Reuben Gray - TaleOfAle said...

Its only a bad investment in the short term but the idea would be that in the long term, the shares will be worth more and there will be profit if he sells them.

Cooking Lager said...

Depends TaleofAle on your investment model. If a chartist or follower of greater fool theory you would not care to calculate fundamental value, caring only whether you expected the price to rise on the basis of your chart model. You may be a fool to buy shares this way, but so long as you believe in the existence of a greater fool that will pay more tomorrow, you buy. Otherwise you calculate fundamental value which is the expected future profits discounted by the price of money (usually the interest rate). Hence the expected future is priced into the fundamental value of the share. On fundamental value, Wooly got pissed and bought a load of ten pence pieces for a quid each.

Reuben Gray - TaleOfAle said...

Actually when I initially read that Dave had invested, I thought it was a normal stock market thing but it looks like its a very odd private system and the overall shares sold (if they sell all 10k) only account for 10% of the business.

Tandleman said...

10% indeed. You don't want the oiks to actually have some control after all.

Cooking Lager said...

Whether the market for a share of an economic enterprise is public or private, only affects its value if investors place a premium on the tradability of an asset. The existence of market makers in public markets ensures there is always a buyer and seller match. Without that, trade of the asset is one of finding someone and agreeing a price. Mr Market doesn’t offer you a price every hour of every trading day. However if you are an owner and not a trader you do not need a price quote every day. Like your house, you only need to know its price when you come to sell. As for the % of the business offered, this is less relevant than the price/value ratio of what is offered. If you invest you presumably trust the management involved, believe them successful and hope they continue. It could be considered a strength that they have retained control and a factor in future success.
Whether the value of the company increases or decreases tomorrow, doesn’t change the fact that the price paid by mug punters wanting a piece of Brewdog placed a valuation on the company in excess of reality. In short they were stung and the price value ratio stunk. If they consider themselves fans, then they have a souvenir, much like a soccer fan may buy 1 share in his beloved club and place the certificate in a frame. They do not have an investment.

Anonymous said...

Mr. Protz's Wiki entry, obviously written by himself, just reads, "Sad, sad, deeply sad...". Oh, and his blog is a load of shit. Almost makes Dave's look good. ;-)


Unknown said...

Matt, you do indeed need to try Tokyo*

TaleofAle, so, if I get some are you coming across to try it?

Tandleman, agree mostly with what you say, except they are at capacity with their existing plant and that's with working night shifts. I'm not sure that their gimmicks will stop although your point that the majority of the brewing is going to have to be more accessible main stream stuff. That's not really much different to now, their on-line sales this year only accounts for a few £10k compared to their somewhere around £1.5M. My own experience of exploring the possibility of getting their cask shows that it is widely available to free houses should they wish to have it. But, like you, I'd like to stumble across it in cask more often.

JJ, hit the nail on it's head.

Ed, Cookie and anybody else concerned about the value. I think it is extremely difficult to value a fast growing company with this amount of success. Yes, I have never disagreed that I bought an investment valued significantly lower than what I paid. But that is the point, these guys can turn any publicity into good publicity, that's why I'm happy they are looking after my money for a while. Only time will tell and the risk is definitely there.

Washy, being compared to the great Mr Protz like that, have you no shame man?

Curmudgeon said...

I haven't invested in this (although I have considered it) but I think the comment made when the offer was originally made is a very fair one - it is more putting your money where your mouth is and joining a BrewDog supporters' club (with discounts) than a serious investment.

StringersBeer said...

Do you know, I didn't think the video was funny, so I mustn't have a sense of humour. Thanks for clearing that up Dave. Or maybe it's something to do with the day I've had. But it was obvious that the brewdog boys were enjoying themselves and that's what counts after all.

On the other hand, the idea of the new bd plant, to be built on greenbelt following local politicians' decision to ignore their officers recommendations and their own rules - that did make me laugh.

Tim said...

Its only a bad investment in the short term but the idea would be that in the long term, the shares will be worth more and there will be profit if he sells them.

It depends. Is theer an anti-dilution clause in the agreement? If another big investor steps up and buys a percetage in the company and new shares are created then that one share will dilute out further.

Reuben Gray - TaleOfAle said...

Yeah Dave if I am lucky I will make it back over next year some time.
I have to see how your beer is coming along. I will bring some of my own next time.

Anonymous said...

Let's hope that odd woman isn't there this time!


Leigh said...

well, if the portman group get their way you'll be struggling to stock any Tokyo at all unless the labelling is changed...

Sat In A Pub said...


They've picked your pocket and no mistake.

Sid Boggle said...

I asked James Watt at his recent LoveBeer@Borough 'meet the brewer' thing, if he felt that they'd have to consider their stake/shareholders when thinking up future stunts, and he (jokingly?) said that BrewDog had six weeks left before turning over a new leaf in 2010.

Looking at the numbers in the prospectus, Griffin got 12.5% of the company for £600K, valuing the business at £4.8m. The equityfor punks thing raises £2.1m to £2.3m which is supposed to equate to 9% of the business. I believe the efp shares are non-diluting and non-tradable until 2012, but I was losing the will to leave by that part of the offer document ;-)

Curmudgeon said...

It sounds as though BrewDog may well be forced to skulk home with their tail between their legs:

BrewDog, the controversial Scottish brewer, could be forced to cancel plans to raise £2.3m via an issue of 10,000 shares unless it can find more investors in the next two weeks.

The group is seeking to raise the money through what it calls its 'Equity for Punks' share offer to fund expansion projects, including a new brewery facility.

But to comply with the terms and conditions of the share offer BrewDog needs to raise £500,000 by January 8, 2010, and has admitted it needs to find more people willing to buy shares, priced at £230 each by that date.