On Scotland’s North East coast, a craft beer startup is trying to brew a revolution. “The idea to start our own brewery certainly wasn’t something we consciously set out to do,” says James Watt, who founded BrewDog along with his school pal Martin Dickie. It all began when the two were discussing beer monotony (“the stuffy ales and fizzy yellow lagers”) and how often supermarket and big brand beers taste the same.
Dickie had just finished a degree in brewing so the duo decided to try and create their own beer. The goal was to make something a class apart from “the stuffy ales and fizzy yellow lagers” that dominate the UK market. Watt: “I guess like any good idea it just had this natural flow about it that just kept rolling and has never really stopped.”
Dickie (left) and Watt.
A makeshift brewery
After their discussion, the pair set up a “sketchy” makeshift brewery in Dickie’s garage and created the first batch of what is now known as Punk IPA. They took the pilot beer to a series of open tastings and were discovered by beer guru Michael Jackson (“The Beer Hunter,” not “The King of Pop”) at an event in Glasgow. Upon tasting the beer, he told them to quit their jobs and go into brewing fulltime. And that’s exactly what they did.
Both were only 24-years-old at the time, the pair took the plunge and leased a building. Watt: “We somehow managed to scrape together £10,000 of personal savings between us along with a £30,000 bank loan which we lied to get. We found that turning up at the bank wearing a suit whilst pointing at a series of useless numbers on a spreadsheet is the best way to get a business loan.”
The beginning stages involved a lot of long hours. “The first year involved living, eating and sleeping at the brewery — a drafty warehouse on Fraserburgh’s coastline,” says Watt. “Exposed to the elements and running short on funds, Martin and I often worked 20 hour shifts, both to stay afloat but also to stay warm.”
Within a year, a buzz began to form around their beers. Some people attacked their “reckless and irresponsible” approach to brewing. Others saw their beers as wildly innovative and providing a much-needed shakeup to the outmoded classic beer world. “Many people are still making their mind up over which brush to tar us with,” explains Watt.
Scaling up
The rocketing demand meant the company had to deal with scaling issues — specifically: maintaing quality control while brewing more beer. “We are all about the beer quality, not about how much beer we make,” says Watt. “We live and die by what is in the bottle and what is in people’s glass. We want to ensure every single beer that leaves our brewery is a true reflection of our beer philosophy and the beer we can make it. To have this much control is just not possible when you scale up too fast.”
Watt’s advice to other starters
Find something you are passionate about and have an almost unrealistic level of confidence in your own ability. Starting a small company you get so many doubters, so many kicks, so many knocks and so many set backs. Only passion and belief gets you through these times.
On a realistic level though, you also have to have a some kind of business sense. Check out the competition and if you can’t identify other businesses doing what you’re doing, it’s maybe worthwhile considering whether a marketplace actually exists.
So even though the company was profitable and turning over £1.8m (around $2.8m), it reevaluated its plans. Watt explains, “We needed to completely reinvisage the way we financed our company in order to hire talented staffers and boost the amount of beer we were able to produce whilst ensuring we still sourced the best, rarest, and most obscure ingredients.” In the midst of 2009’s post-recession climate, BrewDog opted for a completely alternative business model called “Equity for Punks.”
“Equity for Punks turned the concept of business ownership on its head,” according to Watt. “Despite having run the business for just two years, we took the unprecedented step to become a PLC. Then we offered the public the opportunity to buy shares (just under 5% of the company) in BrewDog. We managed to raise over £700,000 in extra funds as a means to growing BrewDog even further. Over 1,300 people bought into BrewDog’s vision of a craft beer future that offered people more choice.”
Now the company exports 700,000 bottles per month to over 27 countries worldwide. 2010 revenue was £3.5m with profits of £300k. There are 65 staffers and locations include a brewery, three bars, and a restaurant.
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