The last thing BrewDog needs: a takeover bid from its embattled ex‑boss

BrewDog burst on to the scene with a bang, thumbing its nose at the UK’s sizeable band of humourless health scolds with its super-strength beers (we’re talking 57.8 per cent) and unapologetic boozy hedonism.

Founded in Fraserburgh, Aberdeenshire, in 2007 by schoolfriends James Watt and Martin Dickie, BrewDog began as a tiny operation hand-bottling beer in a rented industrial unit, driven by frustration with the blandness of the UK beer market and fuelled by a deliberately confrontational attitude.

The pub operator and brewery encouraged customers to join the financial party as “punk” investors, offering rewards – money off booze, trips to AGMs with beer tastings and live music – to those who bought in.

Those gatherings were run more like an open-air gig than a traditional corporate AGM convened to discuss the financials, re-elect directors and field questions from investors.

At its peak, BrewDog and its franchise partners operated dozens of bars around the world – more than 70 at one point – while its “Equity for Punks” scheme attracted tens of thousands of small investors, many drawn by the sense that they were backing a movement rather than a company.

Its early advertising campaigns leaned heavily into provocation: beers stronger than wine, stunts designed to outrage regulators, and marketing that openly mocked the industry establishment, all of which helped BrewDog cut through and build a fiercely loyal following among drinkers bored of standard lager branding.

Now the music has stopped. BrewDog has reported a string of losses and, more recently, a decline in sales too. The company has hoisted the “for sale” sign and called in AlixPartners to oversee a quick-fire process.

For years, that decline would have seemed unthinkable. BrewDog beers were everywhere – poured in its own bars, stocked by leading independent pubs and retailers, and sitting prominently on supermarket shelves at Aldi, Asda, Ocado, Morrisons, Sainsbury’s, Tesco and Waitrose, a level of mainstream penetration few craft brewers ever achieved.

As ever with BrewDog, it’s controversial – and not in a good way – if the angry comments from “punk” investors are anything to go by.

The headlines first turned sour over revelations about workplace culture. Co-founder James Watt found himself at the centre of accusations that he had built the business around “a cult of personality” and presided over a “toxic workplace”.

An open letter from “Punks with Purpose” accused him bluntly: “You have become a lightning rod for some of the worst attitudes present on both the internet and in real life.

“You spent years claiming you wanted to be the best employer in the world, presumably to help you to recruit top talent, but ask former staff what they think of those claims and you’ll most likely be laughed at. Being treated like a human being was sadly not always a given for those working at BrewDog.”

Ouch.

Watt stepped aside as CEO and later left the business. He is reportedly keen on a comeback and is seeking backers to make it happen.

For some of Watt’s investors and former staff, that prospect may prompt the urge for a stiff tot of one of the company’s own distilled offerings.

A BBC documentary, The Truth About BrewDog, alleged that he had been seen snogging an intoxicated customer on a rooftop. Female bar staff were reportedly advised on how to avoid unwelcome attention from the youthful tycoon, and rosters were said to have been adjusted so certain employees would not be working when he was expected on site. One former employee, Katelynn Ising, who worked at DogTap – BrewDog’s flagship bar and brewery in Canal Winchester, Ohio – told the BBC that some female staff would dress down when they knew Watt was visiting.

Watt denied wrongdoing. But the lingering whiff of scandal means that any attempted return would not simply be a commercial calculation. Some backers, staff and customers may reasonably ask whether they wish to relive that chapter – or whether it would be wiser to look elsewhere. BrewDog and James Watt were approached for comment.

But even reputational storms can be weathered if the numbers stack up. BrewDog’s haven’t. Losses have mounted; sales have slipped, too.

So how much of this is self-inflicted, and how much reflects the wider malaise gripping hospitality?

In truth, both matter. BrewDog would not be the first young, noisy, fast-growing business to trip over its own feet. Rapid expansion and swagger are no substitute for sustainable economics.

Yet it is far easier to trade through self-inflicted wounds when customers are reliably arriving with open wallets and costs are stable.

That has not been true for some time – particularly in pubs. Government policy and taxes have left the sector nursing a hangover bigger than anything induced by BrewDog’s ice cream stout. (For the record, no, I haven’t tried it. And I have no intention of doing so.)

One option reportedly under consideration is a breakup: separating brewing from pubs. The former would still face cost-of-living pressures and the structural shift towards lighter drinking – especially among younger consumers. But it could at least sell through supermarkets and market directly to customers.

The pubs are more exposed. Even after shedding 10 outlets and focusing on larger “destination” venues such as Waterloo, they must grapple with spiralling energy bills, wage pressures and taxes. Charging £10 a pint – or more in prime locations – is less greed than grim necessity when margins are so thin.

It is no accident that reports of mass closures industry-wide have become commonplace. Nigel Farage – whose birthday party was controversially attended by the anti-Brexit Watt – has made the plight of pubs and brewers central to his messaging.

That is precisely where this becomes a political failure as much as a commercial one. While Reform UK has been quick to frame the crisis facing pubs as evidence of an out-of-touch Westminster, Labour has been slow to grasp the cultural and economic significance of the sector, leaving space for rivals to turn closures, job losses and shuttered locals into potent political symbols.

Boozers are a little like the Church of England: people mightn’t attend often (if at all), but they want them to exist. They are community anchors, and their disappearance is keenly felt, even by those who only venture in at Christmastime.

Labour initially seemed to miss that political truth and was forced into a hurried offer of extra support. The predictable response from other struggling hospitality businesses was swift: “Well, what about us?” Justifiably so.

As for BrewDog’s small legion of punks – those who bought the marketing and paid for a slice of the dream in one of the group’s fund-raisings – the prospects look bleak. They are unlikely to see much, if anything, from a sale.

The real punks – the bands who played sticky-floored clubs, were stiffed by labels and eventually took proper jobs – are now in their dotage. They will recognise the pattern. This is an old story about hype, hubris and harsh commercial reality. And it will not be the last.