Brewdog Development fund

Really surprised no one has posted this or started a talk about it yet.
Yesterday Brewdog announced their small brewery development fund http://www.brewdog.com/blog-article/brewdog-development-fund0 .

So now brewdog is buying up ownership in smaller breweries? This something I would think people who have more interest in discussing. What do you guys think about brewdog having their hand in one of the smaller London breweries and potentially more of them as this goes on? Isn’t this the type of behavior associated with the big breweries that brewdog has for years lampooned?

It would be interesting to know what sort of equity £100,000 gets them and what they are contracted to do for BrewDog.

was at the brewdog agm when they announced this.
guess it depends on the terms of business which we will likely never know.
do BD have any creative influence and how much say in the business?
i see this (again with no knowledge of the terms) as a dragons den kind of thing.
nominal holding but spreading the contact and distribution network that BD have in order to promote the brand and shift the beer.
i’m firmly sat on the fence over this until i hear good or bad to come from it!

I wonder what might be the outcome for the Distribution side. Mikkeller is distributed by Brewdog in the UK. Are most people happy with that distribution? I remember reading a number of responses when that first happened about large price increases and less availability then before. If they really do start to feature BBN in all brewdog bars will the mean that some of the bars that get it now will be likely to get less? Brewdog can shift some product for sure and it isn’t as if BBN is making massive amounts yet.

It sounds win win to me. Brewdog gets a stake in a brewer and the brewer gets access to larger, wider distribution. Brewdog gets a hot new beer brand, and then is able to expand that brand and increase the value of their stake as that brand increases in value. The only issue is that the quality of the beer holds, but I’m sure the BBN lads will be all over that.

It’s an interesting proposition, to be sure. But Ryan, you’re perhaps a little cynical and more than a touch disingenuous. Of course BrewDog isn’t a small company, and I don’t think you will find anyone on RB defending them as such. BrewDog is a well-run business that started off making some good beers and that, as it has grown tremendously quickly, has continued to make some good beers. The fact that you have to sift through their bullshit doesn’t mean they aren’t still making some decent beers.

But BrewDog are, first and foremost, a business. They recognise the ’craft beer trend’ (who doesn’t) and in an effort to diversify their cash flow they’ve introduced this development program thing. Yes, other large breweries/corporations have done similar things. AB-InBev owns 32% of Craft Brewers Alliance (Kona, Widmer, Redhook), for example; but there aren’t too many other breweries large enough to move the needle for a company like AB-InBev. I’m sure there are plenty of small breweries around that would happily sell a portion of themselves to one of the big boys; but the fact is, the big boys don’t care enough to buy a small brewery. AB-InBev and their ilk think in billions of dollars; most small breweries would be happy to deal in millions, I reckon.

But BrewDog are still small enough, and nimble enough (they aren’t beholden to shareholders, actually) that getting a share of a small but growing brewery can impact their bottom line. And at the same time, they do in reality help the smaller brewery (as Ed noted), and they also concurrently engender goodwill amongst the average ’craft beer drinkers’, who (and I’ll put on my cynic cap now) are pretty stupid as a group.

The major point is, those who view BrewDog through a cynical lens will see this Development Fund as a cheeky move (and they aren’t wrong), while the BrewDog apologists will say this is BD supporting the ’craft beer cause’ (and they aren’t wrong, either).

Also, I would be very interested to know the terms of the arrangements, in particular, do the breweries have the option to buy out the BD share if they want. If I again put on my cynic cap, I can only imagine that BD, the money-man in this deal, gets some pretty decent terms.

I prey this is not a money-motive but a genuine attempt at helping out BBN and Cap Brewery. I am unsure of what arrangements have gone with this deal. Even with sources as good as mine. I am also worried that this will see a trend of other bigger breweries taking over craft or smaller breweries. I am worried about this venture but it is still early days. I think Brewdog bars are still too pricey and I am still keen on Mikkel opening his own place in the UK. I am also wary that Brewdog have a reputation to uphold and if they are changing they need to watch their tone.

Originally posted by tdtm82
I think Brewdog bars are still too pricey and I am still keen on Mikkel opening his own place in the UK.

Imaginarily posted by EdKing
It sounds win win to me. Whitbread gets a stake in a brewer and the brewer gets access to larger, wider distribution. Whitbread gets a hot new beer brand, and then is able to expand that brand and increase the value of their stake as that brand increases in value. The only issue is that the quality of the beer holds, but I’m sure the BBN lads will be all over that.

Imaginarily posted by EdKing
It sounds win win to me. Greene King gets a stake in a brewer and the brewer gets access to larger, wider distribution. Greene King gets a hot new beer brand, and then is able to expand that brand and increase the value of their stake as that brand increases in value. The only issue is that the quality of the beer holds, but I’m sure the BBN lads will be all over that.

Well it’s not like BrewDog are actively going around trying to buy-out and shut-down smaller breweries. They’re offering start-up money and expertise to small breweries who want it. I guess the specific terms they offer the brewery could make it exploitative, but I’d be surprised if this was the case.

I suspect the benefits for BrewDog are that they’ll get stock from exciting, up-and-coming breweries, which will help their bars and the distribution side of their company, and good publicity as being seen as supporting small breweries as they get on their feet.

The people who complain about BrewDog typically say that they are self-serving publicity whores. But it’s also widely (and correctly) recognised that they played a pivotal role in developing the fledgling UK craft scene. I wouldn’t be surprised if they thought of this as capitalising on the latter fact and securing their image as, at least in part, a driving force for innovation and development in the beer scene ("Sure, they do all these silly publicity stunts, but look at all the nice, noble things they do for the industry").

I think it would look very bad for BrewDog (for the reasons Ryan says) if they started behaving aggressively and exploitatively towards smaller breweries, and I think they’re smart enough to know this.

Still, who knows. I’ll be very interested to see how this develops. If it’s done well, I think it has the potential to be a very good thing.