By Liam Hainey
“Do you ever get the feeling you’ve been cheated?” snarled Johnny Rotten at the end of the last Sex Pistols gig in San Francisco. Those words have reverberated throughout the music scene since they were uttered in the late seventies.
However, craft beer enthusiasts may now find them ringing in their ears as well. Ellon based Brewdog, makers of Punk IPA, have sold 22% of their business to US private equity firm TSG Consumer Partners, who also own American beer brand Pabst Blue Ribbon. The brewers was valued at roughly £1 billion.
In normal circumstances this wouldn’t be particularly remarkable, save of course for the figures involved. Large investment houses buying stakes in healthy growing businesses is commonplace. However, Brewdog were never a normal company, or at least they claimed not to be.
Since their inception in 2007 the beer makers have prided themselves on their independence. By claiming to exist outside of the mainstream they quickly achieved cult status and legions of fans with their brash marketing. Their growth from there was undeniably impressive, and large parts were funded by their devoted following.
Their “Equity For Punks” scheme allowed their customers to buy shares and raised millions of pounds to fund Brewdog’s expansion. The scheme had more in common with a crowdfunder than a real share offering, control of the company remained decisively in the hands of the founders, but it was novel at the time and allowed them to grow while keeping the independence they were so proud of.
Jehad Hatu has been deeply involved in Scottish craft beer for a number of years and runs Grunting Growler. Originally a pop-up shop Hatu built up a solid customer base and eventually opened his own shop in Glasgow’s West End last year. He isn’t surprised at Brewdog partially sacrificing their autonomy, “you could tell they were going down that slippery slope a few years ago” he says.
Even though Hatu is a true believer in independents he believes that Brewdog’s growth might still benefit smaller breweries. “I’m hoping that they are able to reach a wider audience, and convert more people into “craft beer”. And then hopefully those newbies will eventually graduate into the more niche styles of beer that are sold at independent pubs, bars, restaurants, and bottles shops.”
Brewdog, of course, aren’t the only formally independent brewery to be swallowed up by a larger firm. In 2015 Californian brewery Ballast Point was purchased by Constellation Brands, the same company that owns Corona, while in 2011 Goose Island was purchased by Budweiser and Stella makers Anheuser-Busch InBev.
In both cases Brewdog decided to radically distance themselves from these brands, claiming their new status as multinational subsidiaries was incompatible with the craft beer revolution.
Following their own logic, Brewdog would no longer be able to serve their own beers in their own bars. However, this sale simply confirms what most already knew. Brewdog is a business and everything else was just marketing.
The question now becomes whether Hatu’s hopes come to fruition or whether these acquisitions result in a more protectionist attitude from the larger manufactuers.
In Scotland, at least, we can already see the craft beer industry dominated by three key players. There are Brewdog themselves, then Drygate who are part owned by Tennent’s manufacturers C&C as well as Innis & Gunn who brew their lagers at Tennent’s Wellpark facility.
The big players in the booze industry were always going to want to get involved in craft beer. While general alcohol sales have fallen in recent years, the speciality drinks industry has grown. However, as a number of craft breweries receive outside investment, the risk exists that they might destroy the market they seek to capture.
Dom Nisbet is the manager of Hippo Beers, one of Glasgow’s newest independent craft beer bars. He believes that the success of the industry is based on variety. Nisbet said: “It’s the choice, and that’s thanks to the consumer. People are thirsty for new and exciting brews.” You can see that belief reflected in the ever changing selection available in his pub. His customers are discerning, they come back to his bar because it can offer them new experiences.
Nisbet believes that, while larger breweries will continue to sell up, craft beer will remain relatively small scale:“The future is more sites that offer contract brewing, which will result in more one and two man operations. That will just create more choice, competition and ultimately drive up quality.”
The future, then, remains uncertain, but it’s clear the craft beer industry will remain in a state of permanent revolution.