I Invested £12,000 in Brewdog – Have I Lost It All?
Calum Watson, BBC Scotland
Richard Fisher, with his home brewing kit and Brewdog founder James Watt’s book of business advice.
Richard Fisher, a 58-year-old former small business adviser from Suffolk, has always had a passion for beer. He even brewed his own ale at home and once considered purchasing a brewery. However, he never anticipated the possibility of losing £12,000 from his investment in Brewdog.
The Allure of Investing in Brewdog
Investing in Brewdog seemed like an opportunity Richard simply couldn’t resist. He, like many others, was drawn to Brewdog’s maverick spirit and independence. With over 200,000 investors involved in the company’s Equity for Punks scheme, Richard wasn’t alone in his enthusiasm. Most investors contributed around £500, acquiring shares priced between £20 and £30. Richard took a more significant leap, believing in Brewdog’s rapid growth and investing £12,000. He envisioned a future where Brewdog would go public, allowing shareholders the freedom to buy and sell shares, and ideally, reaping profits.
The Brewing Industry Disruption
Brewdog’s founders, James Watt and Martin Dickie, were just in their twenties and frustrated with the traditional UK beer market when they began brewing their unique craft beer in an industrial unit in Fraserburgh, Aberdeenshire, in 2007. Their innovative approach set Brewdog apart, and the launch of the Equity for Punks fundraising initiative in 2009 was no exception. This in-house crowdfunding scheme offered beer enthusiasts a chance to own a piece of the brewery and benefit from its success.
– Key Features of Equity for Punks:
– Invited beer lovers to invest and become part of Brewdog’s journey.
– Offered perks, including discounts on beer purchases, birthday gifts, and invitations to the lively Annual General Mayhem with live music and tastings.
Equity for Punks was remarkably successful, raising approximately £75 million before closing to new investors in 2021. This capital fueled Brewdog’s transformation into a global brand with four breweries and over 100 bars.
The Risks of Investment
Many investors, including Richard, viewed their contributions as potentially lucrative, akin to investing in Google or Tesla. However, unbeknownst to many from the Equity for Punks scheme, Brewdog sought institutional financing, which affected the value of their shares. In 2017, TSG Consumer Partners acquired a 22% stake in Brewdog, receiving preference shares. This meant that in the event of a sale, TSG would be prioritized for any returns, creating uncertainty for ordinary shareholders like Richard.
He first purchased his shares about five years ago, unaware of the TSG deal’s implications until discussions surfaced in online forums. Brewdog previously held trading days for shareholders, but the last occurrence was in 2022, leaving many investors wondering about their shares’ value. Richard lamented, My shares have effectively been worthless for the last two or three years.
Diverse Investor Motivations
Not all investors were driven by the desire for profit. Some, like Chris Huish from South Wales, felt connected to a mission and enjoyed perks such as a 15% discount on purchases. Yet, as Chris noted, the price of Brewdog beers became competitive at local supermarkets, diminishing the perceived value of his investment. He remarked, I have no idea how much my shares are worth now. There’s not much transparency.
The Experience of Other Investors
Gareth Fitzgerald, who invested £1,000, acknowledged the inherent risks of stock investments but expressed disillusionment. He felt let down by Brewdog, which had branded itself as progressive. You know when you invest in shares their value can go up or down, Gareth said. But you assume there’s going to be some proper resale value for your shares. We’ve basically just put money in to buoy up their business with no means of selling.
Brewdog’s Response
Brewdog has been approached regarding these investor concerns but has chosen not to comment publicly. However, current CEO James Taylor addressed investors in an online forum, confirming that the firm is considering its strategic options and investment opportunities. He reassured supporters, stating that operations in bars and breweries remain unchanged and that Brewdog values its Equity Punk community.
Conclusion
For investors like Richard, the dream of profit from Brewdog now feels distant. The uncertainty surrounding the firm’s future raises questions about the fate of their investments. Moving forward, clarity and communication from Brewdog will be crucial in restoring investor confidence and navigating these turbulent times.