Yahoo Finance BrewDog loses its bark as 'toxic' claims come home to bite
BrewDog co-founder James Watt describes himself on LinkedIn as a "fully qualified deep sea Captain". After the firestorm of criticism he attracted this week, he may be wishing he was deep below the waves.
The Scottish brewer has never shied away from outrage. Whether it is stuffing bottles of beer inside dead animals or hiring a dwarf to protest outside parliament, the company has courted controversy as part of its image as a “post-punk, apocalyptic, motherf****r of a craft brewery”.
But this week the outrage stepped up a gear. The brand, and its founders, came under fire for creating what former employees said was a “rotten” culture that left them “burnt out, afraid and miserable”. An open letter claimed the company's marketing campaigns were based on “lies, hypocrisy and deceit” and accused it of stoking a "cult of personality", with Watt at the heart.
Watt, taking a break from his stream of self-promotional LinkedIn posts, was forced to address the “residual feeling of fear” staff claimed they had felt. “It’s hard to hear those comments, but it must have been harder to say them,” he wrote. “We aren’t going to make excuses... Most of all, right now, we are sorry.” Co-founder Martin Dickie echoed the sentiment on Friday when he said in an Instagram post he would like to "wholeheartedly apologise" to everyone who signed the letter.
Yet it took the brewer two attempts to strike the right note of contrition. Its first instinct appeared to be to launch a counter-attack, after it encouraged existing staff to sign a separate letter in support of the company. "A group of unhappy ex-employees cannot dictate to the world what it is like to work at BrewDog in 2021," the draft rebuttal said. "Our experiences are just as valid as theirs." The letter was quickly pulled after it leaked on to social media; Watt said it had been dreamt up by his "people team".
The highly public row comes at an important moment for Brewdog as it eyes expansion in the US and a potential stock market float. Watt and Dickie have spent years building up a cult-like status and attracting backing from its loyal drinkers, 130,000 of whom have backed the company financially through its "Equity for Punks" scheme, despite critics arguing the scheme, which allows people to "own a part of BrewDog", does not always offer value for money and can prove tricky to exit.
Damage control is paramount because the claims cut to the heart of BrewDog: “It all comes back to our people,” the company’s charter reads. “Everything we do is for our team and the craft beer fans that get to enjoy the produce of our labour.”
The business, founded in 2007, has prided itself on being an alternative to the faceless corporate brewers; claims of gagging clauses for staff could strike a blow to its reputation.
After having been passed over for a slot on Dragon’s Den in 2008, BrewDog has grown rapidly and is now the largest craft brewer in the UK, with its beers being stocked by supermarkets up and down the country, as well as on airlines including British Airways. Overseas, it is already larger than most of the 7,500 craft breweries in the US, and is plotting further bars stateside.
This colossal rise to success has been propelled by high-profile marketing stunts, such as brewing at the bottom of the Atlantic Ocean and creating a Viagra beer to mark the wedding of Prince William and Kate Middleton.
A punk ideology has been at the centre of all this, the business running slogans such as “This is the revolution - so help me Dog”. The company claimed to have sent "protest beer” to the Kremlin, bearing a picture of Vladamir Putin wearing make-up in response to the country's anti-gay laws. It dropped stuffed cats over London to depict “fat cats”.
However its campaigns have not always been well received. BrewDog’s “Beer for Girls”, which launched in pink bottles in 2018, was branded a sexist and cynical stunt; the company claimed it was a "send-up" of marketing aimed at women. Last year Watt placed the stunt first on a list of "My 10 Biggest Mistakes As BrewDog's CEO" published on LinkedIn.
It also suffered a PR "disaster" in 2016 after appearing on BBC's Who's the Boss TV show, which saw staff given the opportunity to choose candidates for jobs, and failing to recruit anybody for a post. The chosen candidate decided to remain with his existing job instead.
In 2017, BrewDog put its punk ethos at risk by selling a 22pc stake to private equity house TSG Consumer Partners in a £213m deal.
Still, in the most part, customers have given the firm the benefit of the doubt; this year it said growth was its “strongest” yet and that it was having to invest in capacity to keep up with demand. Its revenue topped £238m in 2020 and it shipped some 242m cans.
A public float was expected to value the company at up to £2bn, handing a windfall to Watt and Dickie, who hold around 44pc of the business.
Yet the allegations that emerged this week may have cast a shadow on those plans. Other recent high-profile flops on the stock market had already given bosses pause; takeaway app Deliveroo struggled earlier this year amid concern over the working conditions of its delivery drivers. “I don’t think Deliveroo helped anyone looking to list,” Watt told the Telegraph earlier this year, adding that the company was also looking at options to float in the US. Watt said there remained a “strong preference” for it to become public in the UK.
For BrewDog, the workplace allegations may have brought a moment of reckoning. Dickie said he wanted to "engage with any former employee who will be willing to talk". Watt insisted it would be a "catalyst to be the best employer we can be". He will have to hope so, or his list of BrewDog's 10 biggest mistakes will soon need updating.
