Wednesday, 13 July 2011

Caveat Emptor - BrewDog's Equity for Punks


Fraserburgh's self appointed beer upstarts, BrewDog, have just announced the second stage of their Equity For Punks share offering which they hope will raise over £2.2 million. This cash will be used to reinvest in a bigger brewery that will allow them to keep pace with the demand for their beers. BrewDog have released 90,000 shares in the company at a price of £23.75 per share. However, the minimum purchase is four shares or an investment of £95.

These figures mean that BrewDog value their company at over £26 million, which seems a bit top heavy given that their projected turnover for 2011 is around £7million. As I type these numbers, I hear the booming voice in my head of Dragon's Den's, Duncan Bannatyne stating "Turnover is vanity, profit is sanity". This hasn't, however, stopped various broadsheet financial journalists and City analysts saying that investing in BrewDog could be a nice little bet.

The share offering only went live this morning and already the twittersphere is bubbling full of BrewDog fanboys and girls who have already opened the chequebook and parted with their cash. What do they get for their £95 minimum investment?

Apart from the four shares, they will also receive the following

- Lifetime 5% discount in all BrewDog bars
- 10% discount on beers and merchandise from their website
- First options on special and limited edition BrewDog beers
- Entry into the 'AGM'
- The thrill of owning part of BrewDog (albeit a very, very small part)
- Your very own BrewDog I.D.
- Potential financial return but not for the next two years as no dividend will be paid until at least 2013

There is also a sliding scale of greater discounts on their products up to a 20% discount on beer and merchandise from their website for any investment over £285.

What do I think of it?

I think that a great many people will put their hands in their pockets and buy some shares. Not for the lure of some potential financial return on their investment at possibly some point in the future but for the thrill of being part of the journey of this remarkable brewery. The bells, whistles and added trinkets of the beer and pub discount, access to limited editions, entry to the AGM and, no doubt for some people, having your own BrewDog I.D. will swing it for quite a fair few.

They have no doubt done the calculations and worked out that they could recoup their initial investment by buying £1000 worth of beer off the BrewDog website, or two grands worth over the counter in their bars. For some, that will look quite an attractive proposition. Indeed, I know one of the original shareholders who parted with £230 in the first Equity share release just under two years ago and he has recouped his original investment in discount obtained from purchases off the website. He had to keep buying, though, but he says that he would have bought the beers anyway.

I still haven't decided whether I will be taking BrewDog up on their offer. But, if I do, it won't be because I think that this will make me fantastically rich. It won't. Buying four shares would give me 0.00036% ownership of the company.

If I do stump up £95 for BrewDog's Equity for Punks, it'll be solely for entertainment purposes and for the thrill of the ride.

Nothing More. Nothing Less.

ps, remember, kiddies. your investment can go up as well as down


  1. With the brewdog bar opening in London I recon it will be around 2 years to save £95 in bar and online savings for me. I'm tempted...

  2. There's no fairer reason for signing up I guess! But I can't stop thinking about the 'punk' ethos and how it relates to selling off shares of your company... all seems a bit corporate, y'know?

  3. A well written post which for me hits the nail on the head. I've invested, not because I expect it to make me rich. On the contrary, I've weighed it up on the basis that I may never recoup the investment beyond the discounts and other trinkets that come with it.

    For me Brewdog, despite the odd wobble and miscalculated publicity stunt, has made a great contribution to craft beer in the UK and continues to do so. I like their products and buy lots of them. I like their branding and ethos. I like their front and bravado. For me, parting with cash to support and 'become part of' that is money well spent. If it helps them grow, great and good luck to them.

  4. Not convinced yet. Think I'll stick to buying a 4 pack of PunkIPA bottles from the supermarket for £4.99. When the Glasgow bar is up and running and I've a better idea of how much I could save there, would I still be able to buy in?

  5. @dred, corknill and tabamatu

    I'm with you folk.
    The potential individual shareholders will be purchasing because of the enticements and to be part of 'something' not for any future riches.

    Ultimately, if you have the cash, then a hundred quid is not a great deal to put up for some disco on beers bought at their bars and via their website as well as an early opportunity to get your hands on some BrewDog limited releases.

    Their AGM is a bit special too.

    Now, where's me chequebook?