Drunken Speculation

Brewdog’s UnEquity for Punks

This is your front row seat to the craft beer revolution. This is Equity for Punks.

Brewdog’s general approach to marketing their beer irritates me. The latest example was their attempt to manipulate the “craft beer” discourse in a way that suits their narrow needs. In their tortured logic, Brewdog call out big beer companies for trying to mask their products as craft. In a stunning bout of hypocrisy, Brewdog has decided to borrow the jargon of Wall Street to create a glorified Kickstarter campaign.

equity for punks

For £95, Equity for Punks gives you part-ownership in a real craft brewery. There’s even a legit prospectus.

equity for punks ii

Yep, right there in the first line

Huh, maybe not.

With their third Equity for Punks offering, Brewdog Plc are hoping to raise a smidge under £4 million. Based on the non-prospectus, Brewdog is worth about £10.5 million (undepreciated current assets less liabilities). There are currently 6,291 equity punks – ignoring the massive contradiction in terms that concept presents – and assuming that their shares are worth the same as the ones for sale, that means approximately 5% of Brewdog is owned by other punks and up to 40% of the company could be sold this time around.

Or so you’d think. “If all 42,105 New B Shares were issued, this would represent 3.6% of the Enlarged Issued Share Capital of BrewDog”, meaning the £4 million that Equity for Punks III is hoping to raise will only buy 3.6% of the company.

If you add the newly raised cash to Brewdog’s assets and divy that up amongst Brewdog’s shareholders, that means an Equity for Punks III share is actually worth… £12.39. That seems like kind of a rip-off.

Fun fact 1: part of Brewdog was sold to an investment bank in 2009.

Admittedly, I have used a simplistic method of evaluating Brewdog’s value as a company*. Presumably, you would pay a premium to access Brewdog’s astronomical 167% growth. Except from the FAQ:

Do the shares have a dividend entitlement? Yes, the shares we are selling here are fully voting shares with the exact same rights to dividends and capital as all existing shareholders of BrewDog. However our current growth strategy means we are focussing on re-investing profits to fuel further growth in the short to medium term.

That premium is really not worth anything if the profit, irrespective of how fast it grows, isn’t shared. Nonetheless, even if 100% of last year’s profits were paid out as a dividend, each EfPIII shareholder would receive 37p, which is a measly 0.3% return on investment. For the record, the Dow Jones Industrial Index offered a 22% return over the last twelve months, solely on capital gains.

Speaking of, in theory, you could potentially cash in the capital gains of the shares as Brewdog grows. Except that your shares aren’t listed. The Equity for Punks offering is governed by UK Securities Law but your shares are not tradeable on a well-regulated – or any – exchange. In fact, you won’t be able to offload your shares until 2015, in a system that Brewdog has yet to detail. Incidentally, the non-prospectus makes no mention of this.

Fun fact 2: HSBC lends money to Brewdog. The same guys that launder money for Mexican drug cartels.

Brewdog call Equity for Punks an “investment” but there’s no actual way for you to make any money out of it. At all. That’s actually the complete opposite of an investment. Equity for Punks is really a dressed up method of crowdfunding that pretends to be something it isn’t. Sound familiar?

The moral of the story is: just because you’re “craft” doesn’t mean you get a free pass on the marketing bullshit.

The above will be for naught though, because even a brief Google search tells me that previous EfP offerings have been wildly, spectacularly successful. Their marketing may annoy me but those guys know how to make a quid.

*An alternative valuation might suggest that Brewdog is actually worth £111 million, which seems just a tad ridiculous for a company that made a profit of £437,000 last financial year.


  1. Guess the people buying those shares are sucked into the whole “OhmiGod! I have shares in Brewdog!” hype to look at what they’re actually giving money to.
    It’s also highly amusing that a undeniably corporate entity like Brewdog calls itself “punk”.

    • I did quick Twitter search for Equity for Punks and I think more people are excited about the discount (something like 10% on Brewdog beers sold at their bars and online) than the idea of ownership. I mean, how many are really going to turn up to Brewdog’s AGM? [EDIT: Lots, according to Mr Zythophile himself. See below]

      I thought the irony was too good to pass up though.

  2. Brew Dog aside, rather than shares, could take the idea and turn it into a club type of thing. I’d give Mountain Goat $100 a year if I could get a %10 discount on any product I purchased, would have to include tap beer.

    • Bridge Road have the Posse, which I maintain is the best kind of fanclub. They send you a case every two or three months and include some special Posse-only beers along with some of their seasonals and regulars. The problem is that it locks you into buying a lot of beer from one particular supplier, which seems kind of antithetical to the concept of craft beer.

  3. “I mean, how many are really going to turn up to Brewdog’s AGM? ”

    About 5,000, apparently. It was 2,000 last time.

    To factor in the real return on your investment, you’d also have to calculate those discounts on the beer.

    • Well I stand corrected then. Edited to reflect this.

      Re ROI: To get a return of 7% (not unfair?) on one share, you’d have to buy ~£64 worth of Brew Dog beer at a 10% discount and for that to really be of value, you would have to have bought that beer whether you owned the share or not. I don’t believe many publicly-listed companies require you purchase the product they sell in order to achieve a decent return. In reality you’re out £159.

      Alternatively, if you accept that the share is worth ~£15, then you’d need to buy £800 worth of beer to make up the difference via the discount. Which I guess Brewdog fans might do over the time they own the share.

  4. Kal

    You get ten pounds voucher for bars back straight away
    A yearly invite to the agm which is an amazing day and night and 10 percent off all purchases on top of 15 percent takeout already
    this is for life so I’m pretty sure I’m going to make my 85 quid back before I go to craft heaven

  5. Kal

    Actually working it out I probably already have
    If you spend 20 quid a week in the bar then I’m 8 months your money is back
    So there

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