BrewDog is considering asking its thousands of shareholders to vote on allowing it to change its corporate constitution that would preclude it from receiving investment from a large brewer.
This will likely split its shareholders between those who have invested for fun and free beer and those who have done so for serious financial reasons because such a move would potentially limit its options in the future.
Although BrewDog is ultimately aiming for a flotation in 2019 a lot of beer will flow under the bridge before that point and it would surely be a more sensible route to leave all its financial options open.
To date the brewery has been a pioneer in successfully raised millions of pounds in capital through crowdfunding – but in future the levels of funding it might require could be beyond the capacity of this route. And although having thousands of small shareholders can be an advantage in the early years when they are useful ambassadors for the brand, such numbers of people owning a stake can lead to an unwieldy structure that can complicate corporate action at a later date.
Any decision made on bringing about a vote on its constitution is being driven by BrewDog co-founder James Watt who seems to be resolutely sticking to the view that all big companies are bad. The recent sale of two US-based brewers Ballast Point and Lagunitas to large organisations led Watt to sever links with both companies and it no longer sells their products in its bars.
Lagunitas sold 50% to Heineken while Ballast Point has been bought by Constellation Brands. The decision on ending the relationship with the latter is rather disappointing as Watt himself recently stated in Original Gravity magazine that its Grapefruit Sculpin was his ‘go-to’ beer.
It is not as if Ballast Point has actually sold out to a large brewer because although Constellation has Corona in its portfolio it is more an owner of spirits and wine brands. BrewDog has certainly had its run-ins with big firms – most notably at an awards ceremony sponsored by Diageo, which tried to have an award that was heading to BrewDog instead awarded to another company at the last minute (read story here). But it would surely be wrong to tarnish all large businesses as similarly morally redundant.
BrewDog is adamant that it will only work with ‘craft’ brewers as defined by the US Brewers’ Association, which stipulates no more than 25% of a brewer can be owned by another organisation that is itself not a craft brewer. The main criteria of a craft brewer involves production of less than six million barrels per year.
In order to avoid any confusion with its stance on cross-company shareholdings BrewDog recently exited from its 23% stake in London-based Brew By Numbers brewery – offering its shares back to the company at the original price. This investment was part of its BrewDog Development Fund initiative for investment in young brewers to help them in their early growth stages.
BrewDog has gained great traction in the market by playing the underdog against large beastly corporates but maybe now that it has shareholders from a broad church it should consider in more depth the long term financial security of the company.
Or maybe I’ve got it all wrong and this is just a ruse to garner some column inches in the media.