If you live in a metropolitan area, you can expect a BrewDog bar serving locally brewed beer to come to you soon.
At least those are the ambitions of BrewDog’s cofounder James Watt. Heading the Scottish company with childhood best friend Martin Dickie, Watt is hoping the once-small beer brand can raise enough capital in one of the most hotly anticipated London IPOs to grow the company globally while still remaining local and sustainable.
Known for eclectic media stunts, beer handouts, and “antibusiness business model,” the brewery and bar chain owner and now hotelier worked through the pandemic to make the entire company carbon negative.
That means for every beer produced by BrewDog, the company double-offsets the carbon emissions made in production. “Every time someone has one of our beers, our planet gets less carbon,” Watt told Fortune in an interview.
Now that the beer is climate-anxiety free, Watt is eyeing more capital to keep up with the surging demand, expanding the firm’s distillation process, and broadening its global footprint.
Risky ambitions
BrewDog’s main objective is to increase the number of retail locations giving its customers “more places to enjoy fantastic beer but also get an immersive brand experience because that’s what we’re all about as a business,” said Watt.
Quite riskily, the company has 25 locations under construction, which Watt notes is “a big gamble, given how hard-hit hospitality has been by the pandemic.”
“It’s either going to be one of the smartest things I’ve done or one of the stupidest.”
Some of the new locations include Exeter, Manchester, Edinburgh, London, Columbus, Cleveland, Atlanta, Las Vegas, Shanghai, Mumbai, New Delhi, Berlin, Lyon, Paris, Milan, and Cape Town.
Before the pandemic, the brand’s bars accounted for 30% of revenue, with the rest coming from global sales. It remains to be seen how this will change as expansion progresses.
While gambling on a radically expanding retail business, the company is also attempting to bring in the complicated and expensive process of producing barley in-house rather than relying on global supply chains. Barley production and processing contributes 80% of the firm’s total emissions. BrewDog has already acquired 42 acres of land in Columbus and is now hoping to bring in more of its barley production in-house to allow for better oversight of the carbon produced.
In another ambitious stretch, with more capital BrewDog also intends to build more breweries in different markets, bringing beer manufacturing closer to its customers.
Currently the company makes beer in Scotland, Germany, Australia, and America, and given more funding, Watt said the firm “would like to start making beer somewhere in Asia as well, so we’re shipping beers less distance and the beers are fresher for the customers there.”
Cash-raising plans
Such ambitious goals require cash, but luckily BrewDog has a loyal fan base. All of BrewDog’s capital has so far been crowdsourced, and the group is currently raising “punk equity”—its name for private individual shareholders—hoping to raise £50 million ($69 million) to grow capacity and the number of locations. Punk shares in the company—which are currently priced at £25 each on its website—also come with plenty of free beer.
This is likely to be the last capital BrewDog will crowdfund to sustain its growth before the IPO. Its planned public listing is managed by Rothschild, which is considering a partial float, keeping intact the ownerships of Watt, Dickie, TSG Consumer Partners, who bought into the company in 2017, and the existing 200,000 punk equity shareholders.
BrewDog proudly sources its capital from its shareholders as opposed to leveraging its company, going so far as to conduct a media stunt in 2015 that involved dropping stuffed-cat toys across London’s financial district to celebrate raising money from fans rather than “fat-cat bankers.”
Whether its expansion plans can be done without bank financing is not clear, but the numbers so far have been convincing. BrewDog is the No. 1 craft beer brand by revenue in Europe. It has also been named the fastest-growing beer company in the U.S. It had operating revenue of £214.9 million ($297 million) in 2019 and £350 million ($484 million) in 2020.
And although it is dwarfed by mega-brewers such as Anheuser-Busch InBev—whose brands include Budweiser, Bud Light, and Corona, and whose 2019 revenue hit $52.3 billion, with over 26% of the global beer market—BrewDog is not worried.
“Our goal is to build the world’s leading beer brand,” Watt said. “That’s what we want to do. For us, it’s not about making the world’s bestselling IPA. This is about outselling Heineken, and that’s always been the aspiration.”
According to Watt, Big Beer is over-consolidated, over-leveraged, slow-paced, and not aligned with what consumers think is important.
“Consumers more and more want to align themselves and buy from brands that have purpose, that have a mission—companies that do the right things by their employees and do the right thing by the planet,” he said.
And with more young beer drinkers watching Planet Earth II over talent show X Factor in the U.K., now is the perfect time. Watt recalls a dinner with environmentalist Sir David Attenborough that helped firm up his resolve on going net-zero. Watt said he came to the “very stark realization that we weren’t doing enough for the planet and we were facing an existential climate crisis as humans and huge changes are needed right now.”
BrewDog’s beers are vegan and now officially B Corp certified, meaning that their appeal is wide.
And when the company does list in London, it intends to keep doing things the unconventional way: ambitiously dreaming of a more sustainable, debt-free, aggressively expanding franchise that is unlike any in the world.
Correction, May 4, 2021: A previous version of this article misstated the private-equity shareholder in BrewDog.
