in Savings & investments
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Has anyone invested in Brewdog the Scottish Craft Beer Company?
Is the a wise investment?
Is the a wise investment?
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But it is a wise investment? In my opinion, no but this is more for people who is willing to pay a massive premium to own part of their beer company. Of course, it is unlisted so selling shares would likely to be very difficult.
EDIT: Although it seems that you could trade/sell shares through some website anyway.
Anyway, read the Prospectus beforehand. I will say this, if only all companies are like that. *sighs*
As the previous poster says, prob more for those who want to own part of a beer company, than a wise/serious investment.
They are looking to raise £4m which would value the whole company at ~£112m, not counting employees'/directors' share options (which would only cost them 200k to exercise but instantly be 'worth' £1.5m at the new issue price of £95 per share).
This £112m is eleven times as much as their entire revenue last year and therefore many many many times as much as their annual recurring profits. They made £437k last year, so it's 256x annual profits. But this is perhaps misleading as they are high growth (at least in terms of revenues which they say they'll double this year) and they say it is not unreasonable on the current run-rate of profits since the latest facilities came onstream, even going as far on their site to compare multiples with a 'grown up' drinks business like Diageo.
Of course there is actually a public market in Diageo shares and this is a private unlisted company owned 85% by the directors and their mates who can do whatever they want with it. There is no oversight from activist institutional shareholders or whatever.
They say the fundraising is for future expansion and not to pay back director loans taken out this year but in reality they can do whatever they want with it.
As alluded to by other posters, you could always just buy the minimum number of shares needed to get the maximum discount card. Even if you get just one share you'll get an AGM invite and the same discount in their bars (just a lower website discount than if you bought more shares, and who is to say that in time, the particular tipple you like won't be available from a supermarket on offer below RRP anyway).
I like Brewdog as I like craft beers and they have some good ones. I was in their Manchester bar the other weekend and it was pretty dead, but best not to judge the whole company on that as it was a sunday early evening and I'm sure it livens up on other days/times. But treat any investment in it as spending the £95 per share for perks and a bit of fun rather than investing the £95 for a return. I note the director sold out 55,000 of shares to his mates or VC firms last September to raise £780k, half of which he's loaned back into the company. The price of those sales was £14 a share rather than the £95 they're now seeking from beer fans.
So as a financial investment, I'd say there are plenty of high growth opportunities with lower risk or a better price. If want a shareholder's card to show your mates, don't let that stop you.
i am looking at the right figure? looks like £437k profit last year, so "only" 250x annual profits.
i strongly agree with your analysis in general.
Fellow posters please just press the button on these types of posts, if enough people hit the spam button it gets removed
In the cool light of sobriety I reflected on my normal share selection strategy, which includes reasonably strong and rising dividends and some expectation of share price growth.
I looked at the q and a from the 2012 AGM and saw that one of the founders had stated that the company expected to start paying a dividend on 2013. There was no dividend announcement this year.
Also, I was a little concerned that they were over stretching themselves, in my view, by expanding the brewery, opening up more UK bars, opening a shop in London, creating a swathe of partnerships globally and opening their first bar in Japan. They're also filming a TV series in the US! And they admitted that their online store has been 'pants' and they often run out of stock.
My car also needs new wheel bearings, so the head has ruled the heart. However, I will definitely buy their beer!
Spambomb him in the meantime
As was stated by bowlhead it appears in the accounts that the directors were selling shares at £14, rather than the £95 this share sale is at.
I looked at it as paying an up front £95 to get £10 of 'beer tokens' for their bars, as well as 10% lifetime discount off the online store (admittedly P&P is not cheap, but still works out cheaper per bottle than in off licence) and 5% lifetime discount in their bars. This is great if you live in a town or city they have a bar!
There is the potential of the company continuing to do incredibly well and the website does state they are hoping to create a way to trade these shares in the future (though the demand for this is not likely to be too high).
If thousands of people have bought a share they will continue to make brewdog their beer of choice, as the more beer that is sold then the better is for their share! The prospectus does say demand is currently outstripping supply, hence the need for the expansion.
In summary, in my opinion this is a share to buy for the lifetime discounts and up front £10 beer token, not necessarily to get rich quick or make a huge return on!