BrewDog co-founder defends the price of his beer

Speaking to The Morning Advertiser, Watt said the brewery’s beer was “twice as expensive” as that of industrial beer, and suggested that pubs needed to up their game to survive in an increasingly competitive marketplace.

“Our average price point in UK supermarkets is £4.53 per litre according to Neilson data,” he said. “Industrial beer in supermarkets averages about £2 per litre. We are twice as expensive as industrial beer so I don't think we are culpable there.”

“The fact that pubs are struggling? Good pubs are not struggling. I think pubs need to look at what they are serving, their environment and their staff. So many pubs are doing fantastically well at the moment, and pubs that are not good will not do too well, and consumers are going to vote with their feet and their cash."

BrewDog has just launched EFP Five in an attempt to raise between £10m and £50m to support further expansion of its business, and has plans to build breweries in Australia and Asia, as well as a dedicated sour-beer facility in the UK.

Watt said that the Australian and Asian markets were a key priority for the business, as it seeks to become the largest craft brewery in the world.

"China is very key for us; it is our biggest export market at the moment,” he said. “We've sold about 20,000hl in China this year. We are struggling to keep up with the demand, and it is really difficult to service that market from Scotland. We see a lot of long-term potential in China for craft beer and we want to be part of that movement.

“Australia is another really good market for us. We want to invest and build a really good brewery so that we can get beer into people's hands that is much more friendly for the environment and at a much lower cost."

Investors in EFP Five will be given the opportunity to purchase a minimum of two shares in BrewDog at a cost of £47.50. Watt defended the price of the shares, insisting that investors in previous crowdfunding rounds had seen “a phenomenal increase” in the value of their shareholding.

‘Phenomenal increase in the value’

“If you look at people who have invested in our business in EFP rounds one to four, everyone has seen a phenomenal increase in the value of their shareholding,” he said. “People who invested in EFP one and two have increased the value of their shares by over 2,500%. Even people who invested in EFP four have increased the value by over 100%.

“At its core this is a financial investment in a company that has been the quickest-growing food and drinks company in the UK over the past seven years. You are investing in a very quickly growing company, as well as getting access to a whole suite of benefits, perks and discounts.”

Despite recording 100% year-on-year growth, Watt said the additional financing was required to meet its targets, and that some of this would come from bank financing and investment from private equity firm TSG, which bought a 22% stake in the brewery for £213m earlier this year.

"We are growing so quickly that we are going to have to spend tens-of-millions in Australia, Asia and the Ellon [the company's brewery in Aberdeenshire],” he said. “We are growing at 100% year-on-year; we'll do 400,000hl this year, and are looking to do 800,000hl next year.

“We're also expanding our sour-beer facility, so there's a massive amount of investment required to continue with our growth. We're giving people a chance to be part of that growth and be part of our future."

BrewDog’s long-term goal is to become a privately listed company, so that investors will be able to trade their shares freely, based on market valuations. Watt said that he hoped this would happen “within the next five years”, and highlighted that investors wanting to sell their shares could do so once every 12 months via an online system run by Asset Match.

"That system is as close to market valuation as you can get without being listed,” he said. “In the couple of times we have done it we have had over £500,000 worth of shares exchange hands, all at a significant uplift to what people invested for.”

Despite huge growth in the size and scale of BrewDog’s operations since its inception in 2007, Watt was adamant the brewery had not compromised on the quality of its beers. The brewery employs 25 full-time staff who work on quality control. It has also invested £2m in its laboratory in Ellon.

“Quality is our number-one focus as a company,” he said. “We have more certified and master cicerones than any other [brewing] company on the planet. We live and die by beer quality and it is our number-one focus as a company."

BrewDog’s aggressive growth

BrewDog’s aggressive growth and sometimes-outlandish marketing has attracted a number of critics within the beer industry. In July, Sussex Brewery Burning Sky announced it would be pulling all of its beers from BrewDog’s UK bars over its so-called ‘punk ideology’, accusing the brewery of “shifting the goalposts” of craft beer to “suit their own agenda”.

Watt accepted there was a “level of ill will” from certain quarters of the industry towards BrewDog, but insisted this would not change how the brewery conducted itself.

“We judge ourselves more than anyone else judges us and we want to completely redefine the beer industry in the UK and beyond, and we can't do that if we are making 10,000hl of beer a year,” he said. “We have got to grow and we have got to grow aggressively. We want to elevate the status of beer, and share the passion we have with as many people as we possibly can.

“We can't do that without growing, and that has always been our strategy as a company. Some people love it and completely buy into to it. Some people don't like it but we've never set out to keep everyone happy, and that's never going to be something we aim to do."

Watt also hit out at critics comparing BrewDog’s aggressive growth to that of global beer giant AB InBev, stating that the company had “turned beer into a lowest common denominator” and was “the exact opposite of everything we believe in”.

BrewDog's recently announced Unicorn Fund commits the brewery to giving 20% of its profits away every year, with 10% going to charity. Watt said that the initiative would make the business stronger in the end, and urged other companies to follow suit.

“We want to build a new type of business, and build something that we are really proud to be part of,” he said. “We want to give back to our staff and empower them to feel like business owners, and we also want to do some good as well.

“With the Unicorn Fund we are trying to create a blueprint for businesses going forward, and we truly believe our business will be stronger going forward because we have done that.

“Hopefully in a couple of years I can speak to other businesses and say look 'this is how we were doing before we decided to give 20% away, but we are doing even better now' and make a compelling case for other businesses to join us as opposed to just making money for themselves."