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James Watt, the co-founder of Brewdog, has recently revealed plans to start a new beer brand named Second Best. He intends to offer nearly 20% of the shares in this new company to individuals who suffered financial losses after investing in Brewdog’s Equity for Punks scheme. This announcement comes amidst mixed reactions from Brewdog’s investors, some of whom express skepticism but also hold on to the hope that they might receive something rather than nothing.
Brewdog was established in 2007 by Watt and Martin Dickie and, at its height, operated four breweries along with approximately 100 pubs worldwide. The company’s valuation once soared beyond $1 billion. The Equity for Punks initiative raised £75 million, enabling Brewdog’s expansion internationally, while also offering investors perks such as beer discounts, free birthday beers, and access to live music events at the company’s annual AGM. However, despite this community-driven funding strategy, equity from outside sources eventually diluted these investor stakes.
When TSG Consumer Partners, a US equity firm, acquired a 22% stake in Brewdog, they obtained preference shares, ensuring they were prioritized for repayment alongside any returns upon Brewdog’s subsequent sale. Earlier this year, Canadian beverage and medical cannabis firm Tilray purchased Brewdog’s UK brewing operations, brand, and 11 pubs in a deal worth £33 million. While this sale preserved 733 jobs, administrators reported that 484 jobs were lost and 38 pubs closed, as they were not included in the acquisition. Crucially, investors in the Equity for Punks scheme were informed they would receive no financial returns from this transaction.
Reactions from former Brewdog investors have been cautious. Some, like Gareth Fitzgerald who invested £1,000, are willing to engage with Watt’s new offer but remain doubtful of its financial benefit. Fitzgerald stated, “I’d be foolhardy not to, but I’ve got to say I’ll be a very, very passive investor,” adding, “19.3% sounds good – but 19.3% of nothing is nothing.” Similarly, another investor, Peter Berryman, who invested around £3,000 for himself and his sons, remarked on the proposal’s appeal but expressed concerns about potential hidden conditions, emphasizing his intention to “check the small print” despite feeling “very cynical.” Watt, meanwhile, emphasizes his commitment to these investors, asserting that with Second Best, they will be “second founders” receiving equity with “no catches, no cash required.” Although the official launch date remains uncertain due to pending licenses and legal approvals, Watt hopes to introduce an “alcohol adjacent concept” in the interim
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