How Out-Of-The-Box Thinking Helped One Company Achieve Phenomenal Success

As business owners, we are often advised to think outside the box to get ahead of our competitors – to be unique, authentic, innovative, creative, provide value, and so on. Well, BrewDog, a Scottish company which brews craft beer, incorporates these and more.
Its founders, James Watt and Martin Dickie, are exciting, bold and ambitious, (often irreverent), and have smashed records since starting BrewDog.
In just ten years, BrewDog has grown exponentially – having started with a £20,000 bank loan in 2007, the company is now worth more that £1b!

Background

BrewDog was founded in Aberdeenshire in Scotland by James Watt and Martin Dickie (and their dog!). Both 24 at the time, these guys decided to brew their own beer after becoming bored with industrially brewed lagers and ales on offer in the UK beer market.

The guys were brewing in Dickie’s mum’s garage before having a chance encounter with a renowned beer critic, Michael Jackson, who told them to give up their day jobs and make beer. So, they did. They leased a derelict building and managed to secure bank loans of £20,000 to build brewing tanks. Only tiny batches could be produced and the guys bottled the beer by hand. At the time, they sold their beer from the back of their old van and at local markets.

In its first year, BrewDog produced 1,050HL of beer and its only shareholders were its founders.

Worldwide, it now has nearly 1.000 employees, over 55,000 shareholders, around 50 bars and venues, including bars in Europe, Brazil, Japan and America, 2 breweries in Aberdeenshire, and a brewery in Columbus USA. . (More on the US later.)

No Ordinary Craft Beer

BrewDog’s founders took risks. In 2008, they produced the UK’s strongest ever beer – Tokyo which was 32% abv. They later upped the ante to brew a beer which was 55% abv. A huge media storm erupted, with accusations of promoting irresponsible drinking. Indeed, the UK’s drinks industry body, the Portman Group, banned BrewDog’s beers.

The founders hit back saying that people who wanted to get drunk could do so much cheaper than paying a premium for BrewDog beers. To them, their beer means much more. In fact, their mission, which still holds true today, is to “make other people as passionate about great craft beer as we are.”

And, undeterred by the critics, the founders exported to Sweden, Japan and America and BrewDog became Scotland’s largest independent brewery in only its second year of starting up.

BrewDog’s Anti-Business Model

Watt and Dickie tore up the rule book when they were growing BrewDog. They even described BrewDog as being ‘anti-business’. Why?

The founders experienced first-hand the reliance small businesses have on banks and other financial institutes for backing. Their bank refused an additional loan of £150,000 to expand their business – despite BrewDog’s early successes and a huge demand for their beer. The guys were forced to approach other banks to secure a loan. Fortunately, they succeeded (albeit with a bit of trickery) which meant they could buy more tanks and a bottling machine, allowing them to produce more beer.

By 2010, BrewDog was growing super-fast. To keep pace with demand and to further expand the business, the founders needed yet more money. But, instead of going cap in hand to banks, the founders launched their first Equity for Punks Scheme, where fans of the beer were offered the chance to buy shares in the company online. Over 1,300 invested.

BrewDog’s ‘anti-business’ model was born – a community of real beer lovers investing to fund BrewDog’s expansion – not the banks.

Watt later described this as “… a revolution in small business finance.”

With their new investment, they built the world’s first crowdfunded brewery – a State of the Art brewery (complete with tap-room) in Ellon, Aberdeenshire which opened in 2013.

Headline Grabbers

Watt and Dickie certainly aren’t shy about catching the attention of beer lovers (and others). Colourful names continue to be given to their beers, including Dead Pony Pale Ale, Hardcore IPA, Tactical Nuclear Penguin, Cocoa Psycho, Elvis Juice and Punk IPA.

To publicise the opening of their first bar in Camden, London, the founders drove down Camden Street in a tank (and past the Bank of England) to meet their army of beer fans and demonstrate BrewDog’s ‘occupation’ of the area.

Other publicity stunts to promote their company included:

  • Serving strongest beer ever at 55% abv from taxidermy (roadkill)
  • Projecting themselves naked onto the Houses of Parliament, London
  • Holding a funeral for generic beer in the Swedish capital, Stockholm
  • Dickie dressing up as the Queen for a video blog in 2011
  • Brewing the first ever beer under the sea – Sunk Punk

Watt and Dickie continue to shock and surprise their audience while continuing to be authentic to their brand.

Investing in Beer and People

Watt’s and Dickie’s’ mantra is that they invest in beer and people. Nothing demonstrates this more than their unique call to their fans to increase the register of organ donors in the UK.

The guys produced a beer called Born to Die, brewed to be consumed within 35 days – a nod to the cycle of human existence (and to illustrate the destruction of hop oils over time). They hoped its launch would encourage fans to “buy a beer and save a life.”

In the words of Watt, they wanted to mobilise their army of fans to ramp up [donor] numbers… and nudge more people to help others…”

Donor cards could be popped out of beer mats in BrewDog bars and sent out with online orders.

Also, in response to the criticism from the Portman Group and others, the guys brewed a low alcohol beer – Nanny State – which has been followed by others. As ‘champions of responsible drinking’ designated drivers are given a 15% discount towards low alcohol beers, soft drinks and coffee in their UK bars.

BrewDog’s founders recognise the input from their employees too – each is given an equal share of 15% of the company’s profits. Employees are also given ‘puppy leave’ when they get a new pup!

Investors are given exclusive benefits. And, demonstrating value to consumers and customers, recipes for BrewDog beers are given to home-brewers for free.

Acclamations and Achievements

Watt and Dickie received and MBE from the Queen in 2016 – (despite Dickie dressing up as the Queen in a video blog!)

Indeed, the vast number of awards these guys have is staggering and too many to list here. Here are just a few of those not mentioned elsewhere:

  • In a recession, the business grew 200% two years running in 2009 -10.
  • BrewDog became Scotland’s largest brewery in 2009.
  • Dickie won Scotland’s Youngest Entrepreneur Award in 2010.
  • They won a Gold Medal for Hardcore IPA at the World Beer Cup in 2010.
  • They began hosting their own BrewDog TV show in the US in 2013.
  • Equity for Punks IV smashed the record and raised £10m in 2015.
  • BrewDog secured a record-breaking 5th year on the Sunday Times fast track 100 in 2016.
  • BrewDog achieved revenues of £71m and returned a pre-tax profit of more than £7m in 2016.

BrewDog is now worth more than £1b after selling a 22.3% stake to US private equity firm, TSG. This is a phenomenal achievement considering the guys started out with a £20,000 bank loan. Watt told the BBC that “selling a minority stake… would give us the firepower to compete globally”.

Diversifying into the World of Spirits

Watt and Dickie haven’t stopped at producing bottled craft beer. They introduced a canning facility to their Ellon brewery which allowed them to brew the world’s strongest canned beer – 12.7% ABV Russian Imperial Stout. They also have sour beer making facilities at both Ellon and Columbus breweries and now have over 65 different beers on offer.

Moreover, the founders have diversified into the world of distilled spirits by backing Scotland’s largest independent distillery, which sits in a corner of their Ellon brewery.

The main offering at present is its LoneWolf range of gin and vodka, with whiskies and other spirits in the pipeline. LoneWolf Vodka is lightly filtered only once, while LoneWolf gin is unfiltered. The guys hope that LoneWolf is “set on a similar course [to BrewDog] to redefine the entire industry and establish a new standard for spirits production.”

In a world’s first, LoneWolf is also releasing dedicated mixers (tonic and soda) specifically formulated to “preserve the perfect drinking experience.”

The tagline says it all: “LoneWolf distillery is set to put the craftsmanship back into spirits”.

Equity for Punks in the US

BrewDog’s Equity for Punks scheme continues to be a phenomenal success. Having succeeded in using crowdfunding to build their State of the Art facility in Ellon in 2013, the founders launched the scheme to build a huge brewery in Columbus, Ohio in the US.

Regarding their crowdfunding and expansion efforts in the US, Watt says:

Equity for Punks is a completely new business model in the States – it’s a revolution in small business finance. … few companies have been so bold as to turn their backs on traditional financial institutions in favour of a brave new world of community-driven business… It is about connecting us with the people who love our beer. It is about building a new type of business. It is about taking beer lovers on this amazing journey with us. It is about working together to build something we can all be proud of…  We are combining Europe’s leading brewer with the world’s biggest craft beer market. Expect fireworks!”  

There has been no shortage of fireworks for this pair in their short 10-year history.

Amazing “Immersive Craft Beer Experience’ Hotel in the US

Watt and Dickie are adding to their list of firsts – via crowdfunding of course. They are building a hotel, aptly named the DogHouse, into their new sour beer facility at their massive 100,000sqft Columbus facility.

The hotel, due to open in 2018, will include a craft beer spa, complete with hop face masks, malted barley massages, ‘Hoppy Feet’ pedicures and hop-infused shampoo and shower gels. Their flagship Punk IPA will be on tap in the rooms with a mini fridge of craft beer in the shower, and beer-infused 3-course breakfasts, lunches and dinners.

This is an awesome undertaking and this promotional video says it all.

https://www.facebook.com/BrewDogOfficial/videos/vb.21251598643/10156545520358644/?type=2&theater

Watt says, “Forget Disneyland, this is the new happiest place on earth.”

No Standing Still for BrewDog

BrewDog continues to expand on their colossal achievements. In 2017, the founders, have their sights set on (among other things) four new venues in the US and Scotland as well as further expanding the brewing capacity of their Ellon facility.

They are launching a BrewDog distribution network in Germany to give them better control of their supply chain, and a chilled transport network to transport chilled and fresh craft beer across continents.

Phew!

Be on the lookout Australia and Asia – they hope to expand there soon.

Lessons for Small Business Owners

Watt and Dickie have achieved the kind of phenomenal success most small business owners can only dream about. Energetic, enthusiasts of their brand, the guys (and their team) have made it happen.

The founders have remained authentic. Their sights have never veered from their vision to make other people as passionate about beer as they are. Nor, have they tried to ‘persuade’ or ‘cajole’ a mass market to buy into their brand; they focused on their target market – beer lovers.

The guys took risks. They were (and continue to be) controversial and irreverent – their outrageous publicity stunts are a testament to that. They produced the world’s strongest beers which resulted in their beers being banned by the UK’s drinks industry body. Still, they remained true to their brand.

Further, they turned their backs on banks to secure finance from crowdfunding. By using this anti-establishment method of finance to grow their business, the guys created a new anti-business model. BrewDog is now funded by a community of investors, not by banks or other financial institutions. And it has flourished!

Although risk-takers, the founders were savvy enough to mark progress. For instance, the company was achieving strong growth and profits before the guys began to diversify into producing sour beer and backing LoneWolf spirits.

Watt and Dickie also invest in their community and in their staff. They hire top-notch staff to brew their beers, distill their spirits, and manage their company. And, a share of the company’s profits goes to staff along with other perks. Indeed, the guys have said they want BrewDog to be the greatest company for people to work in. And, you believe them.

BrewDog provides great lessons for small business owners. – Think creatively, take calculated risks, measure progress, be visible, hire the best you can afford, and be authentic to your brand.

 

Sources:        BrewDog.com

BBC.co.uk