April 11, 2017

San Francisco-based TSG Consumer Partners has acquired a 22.3 percent stake in Scottish craft brewer BrewDog for £213 million (US$266 million).

The deal which values the 10-year old company at £1 billion (US$1.25 billion), will include $124 million which will be earmarked to fund the brand’s global expansion into the U.S., Australia, and Asia, while the balance of the capital will be used for “early shareholder liquidity” according to an announcement on BrewDog’s blog.

“BrewDog is an ideal fit for TSG’s mission, which is to partner with visionary founders building next-generation consumer brands,” said Blythe Jack, managing director at TSG Consumer Partners.

“The company is truly a pioneer and leader in the rapidly emerging international craft beer market. We look forward to working with BrewDog and its founders as it continues to innovate, expand and harness a unique rebellious energy.”

Founded in 2007 in a garage with a £20,000 (US$25,000) loan, BrewDog’s early capital was sourced through four rounds of crowdfunding, gaining the independent startups nearly 50,000 small investors called “Equity Punks” by BrewDog founders James Watt and Martin Dickie.

Through this deal with TSG, BrewDog’s crowdfunders will be able to sell up to 15 percent of their shares, or a maximum of 40 shares per investor. Those who invested in the earliest round in 2010 are bound to make a return of 2,800 percent on their investment, with later investors who bought-in last year, could gain 177 percent on their money if they choose to sell.

“Our new partnership with TSG is a launch pad for us to turbocharge our mission to make the world as passionate about craft beer as we are, but it’s also a validation of our crowdfunding model,” said BrewDog co-founder James Watt. “Our Equity Punks now own part of an independent business that has attracted an awesome partner who will help grow their investment even further. Crowdfunding can no longer be viewed as alternative finance; this is the democratisation [sic] of finance.”

Trajectory

Since its launch, BrewDog has capitalized on the growing popularity of craft beers and anti-corporate sentiment to expand rapidly – now employing 800 – and seeing turnover climb by 60 percent last year while posting £7 million (US$8.74 million) in pre-tax profit on £71 million (US$88.6 million) in revenue.

“Assumptions might be made about BrewDog ‘selling out’, but this couldn’t be further from the truth,” said Watt on the BrewDog blog. “Other great craft brewers like Stone Brewing Co. and Dogfish Head also recently took on minority investment deals, which are very similar to the deal we have just concluded.”

The funds from TSG’s investment will be allocated to support BrewDog’s global expansion initiatives, which includes the company’s first international brewery, soon to open in Columbus, Ohio; two beer-themed hotels scheduled to be completed by 2020; the launch of new breweries in Asia and Australia; and the expansion of the BrewDog team. On the longer-term, BrewDog is eyeing an initial public offering (IPO), most likely in the UK within the next five years.

“We are growing mega fast at the moment,” said Watt. “We have broken the record for most consecutive years on the Sunday Times Fast Track 100 and in 2017 we are forecasting our growth will be even faster. We recently shared our ambitious five-year plan with our Equity Punk shareholders, which included adding more capacity in Ellon and Columbus as well as building new breweries in Asia and Australia. All of these projects are immediate opportunities and they all link completely back into our core mission of making other people as passionate about great craft beer as we are. This deal will enable us to take our business, and our community’s investment in BrewDog, to the next level.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.