With frothy sales and a spiky attitude, a Scottish company is injecting fizz into a flat beer market, writes Ian Fraser
The UK beer market is hardly a picture of health right now. Beer sales are falling by 8% a year. Pubs are shutting at the rate of 39 a week and sales of ales and lagers in off-licences and supermarkets crashed by 11% in the first three months of this year.
To make matters worse, chancellor Alistair Darling introduced an above-inflationary “duty escalator” on alcohol sales in his April budget.
So does this mean that the UK’s beer market has finally gone to meet its maker? Not according to a pair of ambitious 20-something brewers from Fraserburgh in northeast Scotland. James Watt and Martin Dickie, both aged 26, who co-founded microbrewery Brewdog in April 2007, believe that what some perceive to be the “dead parrot” of the UK beer market is far from lifeless.
The pair are so confident they can continue to increase sales of their range of specialist lagers and ales that they plan to build a new brewery at Potterton, north of Aberdeen. Due to open in 2011 at the earliest, this should increase production capacity for their range of beers, which includes Punk IPA, The Physics, Hop Rocker, Rip Tide, Paradox/Smokehead, Dogma (formerly known as Speedball) and Trashy Blonde, more than tenfold to 25m bottles a year.
Watt and Dickie, whose beers have attracted a cult following among beer aficionados in at least 11 countries, believe they have important lessons to teach the “faceless multinationals” who dominate the beer industry. They often seek to make mileage out of their mistrust and antipathy for behemoths of the sector like Anheuser-Busch, Carlsberg, Heineken, InBev and SABMiller. Indeed, they blame some of these players for the moribund state of the beer market.
In a recent v-log — a promotional video on the Brewdog website — Watt, who has a law degree from Edinburgh University, smashes some of the UK’s best-selling lagers, including bottles of Stella Artois, Becks Carlsberg and a can of Tennent’s lager, with a golf club.
In another v-log, Dickie, who has a degree in brewing from Heriot-Watt University, said: “The calm before the storm is subsiding; it’s time to reclaim what the faceless multinationals corporate giants have stolen; the time is now. We are a beacon of non-conformity in a increasingly monotone corporate desert.”
This approach extends to the corporate culture at Brewdog, which has only 15 staff. In February, the pair recruited Richard McLelland, the so-called “enfant terrible” of the UK on-trade, who helped launch Smirnoff Ice in the UK before spending seven years on the sales and distribution side at Red Bull as head of UK sales and marketing.
McLelland likes the unorthodox business approach. He said: “We don’t have board meetings; it’s about what feels right, let’s go for it.” So far, the approach appears to be working.
Profitable from year one, Brewdog last week recorded a 450% leap in like-for-like sales in the first quarter of 2009, compared with the first quarter of 2008. It sold 1,850 hectolitres of beer, the equivalent of 560,000 bottles, in the first four months of the year. McLelland said the group is on track to deliver total sales of £1.5m in 2009. He is confident the group will be able to gain even more momentum in the second and third quarters, as it secures additional listings in the on-trade — industry jargon for pubs, bars, clubs, hotels and restaurants.
Brewdog signed a deal two months ago with the independent wholesaler Waverley TBS, which McLelland describes as “the best purveyors of cask ale across the UK”. McLelland has also recently signed deals with the Mitchells & Butlers pub chain and with two regional independent wholesalers, Irvine-based Wallaces Express in Scotland and LWC in England.
However, McLelland said the company will not sign up with just anybody. He said it has been approached by pub chain JD Wetherspoon but resisted its advances. He said: “I don’t see that as a natural home for our beer.” He claimed this is because of Brewdog’s determination to “keep control of the integrity of our product”.
In the off-trade, the company’s products are already available in a number of supermarket chains, including Asda, Tesco and Oddbins, and it anticipates securing deals with Waitrose and Morrisons in the next few months. Brewdog’s biggest selling brand, Punk IPA, went national in 400 Tesco stores in September 2008 and its 77 lager is due to hit 300 Tesco stores before the end of June.
Interestingly, the trio at the top of Brewdog insists their aims are altruistic. They have repeatedly claimed that their goal is not to get rich quick but to school consumers in the merits of “crafted” ales and lagers produced in smallish batches, using only natural ingredients in an imaginative, caring and environmentally-friendly way.
McLelland said: “We are in business in order to get our craft beer out to the public and to as many people as we possibly can and we are not as worried about our profit margin or shareholders. The company has never been motivated by money, it’s motivated by a desire to get quality beer out into the market place.”
In some ways, Watt and Dickie have brought to the art of beer-making what Julian Metcalfe and Sinclair Beecham brought to sandwich-making when they launched Pret a Manger in 1986. There could also be parallels with the uncompromising stance taken by Richard Reed, Jon Wright and Adam Balon who launched Innocent in 1999. In keeping with the Pret and Innocent founders, Watt and Dickie have an astonishing knack for creating publicity for themselves. For example, their high-profile row with the Portman Group last year.
The self-regulatory body for larger drinks businesses wanted major retailers to delist certain Brewdog products because they featured the words “aggressive”, “twisted” and “merciless”, on their labelling. Brewdog turned the row to its advantage, at one stage threatening to sue the Portman Group for defamation, and finally won the battle.
Watt said: “This is a victory that we had to fight tooth and nail for. We refused to roll over and be bullied into changing our packaging by a cartel funded by our larger competitors. We were determined and stood our ground to keep our dream and our business alive.”
He said its David against Goliath victory sent a clear message “to the rest of the sleepy, stuffy and mediocre UK brewing industry”. The Portman Group said this weekend: “It’s wholly inaccurate to portray this as a vendetta against Brewdog.”
In a separate row, Alcohol Concern Scotland raised concerns about the company’s use of the name Speedball for one of its beers. This is also the name for a heroin and crack cocaine cocktail, and there were suggestions that Brewdog might be encouraging drug abuse. The product has now been renamed as Dogma.
The biggest danger for Brewdog is that its cult image could suffer as a result of stores such as Tesco, Asda and Morrisons listing it. McLelland denies this and responds by using a musical analogy. “The Clash is in Tesco too. . . this doesn’t mean that their music has in any way been compromised, does it? Our ideal is to make quality beer and to get more and more people in the UK drinking UK- produced quality craft beer. It’s really important to us, when we do all the cool marketing, that people can actually buy the product.”
This article was published in The Sunday Times on 10 May 2009