BrewDog AU to expand following growth

BrewDog Australia is set to use an improved performance in 2021 as a springboard for growth, with plans now firming up for venue openings in Melbourne and Sydney.

According to full year results submitted to ASIC, BrewDog Group Australia reported losses of just under $1.1 million, a 37 per cent improvement on the $1.7 million losses in its 2020 full year.

BrewDog said this was driven by growth in brewery revenue and improved trading in retail operations.

Revenue from customers grew considerably, from $5.6 million in 2020 to $8.1 million in 2021.

Losses were restricted through tight cost control, “significant” distribution and sales growth in Southeast Queensland in the second half of the year, and it also held back on expansion interstate until trading conditions stabilised.

Building a foundation

Plans are on track for accelerated growth, according to Calvin McDonald, BrewDog’s head of Australian operations, who said that consistency in trading conditions had helped the company’s position.

“Being able to perform as a bar operation pretty consistently in 2021 definitely helped us,” he told Brews News.

“But it’s important to remember that it was only in mid-December that our borders opened again. So that’s an improved performance up against still quite a lot of adversity compared to any projections before we set up shop here.

“So I think we can be really pleased with that. It gives us a lot of optimism looking forward. And it’s allowed us to be confident to continue investing in Australia and expanding their projects.”

BrewDog operates the brewing and hospitality sides separately, he explained, but as a symbiotic relationship.

“Just getting that real continuity of what people can come in and expect from BrewDog in Australia has been really, really helpful. So obviously, the more revenue we’re making for the taproom, the more we’re buying as a hospitality business from the brewery business,” McDonald said.

Australian general manager Ed Bott said that now that they had built a stable base, expansion is in the works.

“We have kind of probably held off the pace of expansion a little bit because of COVID restrictions, border closures and [we’ve paced] expansion beyond southeast Queensland.

“We’re seeing through the last four months really started in March last year in terms of external sales to go from there to where we are now, we’ve seen already significant year-on-year performance every month now,” Bott explained.

“We’re now bringing in our first sales reps interstate, into New South Wales, we have bar expansion plans and we think by the end of the year, the brewery will probably triple in production.

“And as a result, we’re doubling up production, at least in terms of capacity, more than doubling our capacity intensive tank space in August. And that’s only the first step, so we’re really confident. We’re now through the challenging phase of COVID – and setting up during that was challenging. But now we can invest with confidence and now we’ve got a solid basis where we are, retail, DogTap here in Brisbane, and new bars.”

BrewDog had initially suggested when it opened in Brisbane that it would be building a 50hL brewkit, before halving the size.

Hear more about BrewDog AU on the Beer is a Conversation podcast with general manager Ed Bott.

New venues

BrewDog has never been shy about its expansion in Australia or globally, and made waves on social media recently with the promotion of its new Brisbane bar.

“If you’ve been on Brunswick Street in the Valley [Fortitude Valley, Brisbane] recently, you’ll have seen the hoarding up telling you what you can expect BrewDog Fortitude Valley in Spring 2022. So things are well on track with that, we’ve got a great landlord there who actually came to us with an amazing old building, so there’s lots of heritage features that we’re trying to preserve and it’s going to be a real iconic BrewDog site,” Calvin said.

“The build is well underway, we’re still finalising a few bits and pieces with the fitout, but you can expect three floors and a beer hall-style first floor on the ground floor.

“We’ve got an upstairs bar as well, so it’ll improve our ability to do functions and private hires and just really service a slightly different demographic to what we do out here [in Murarrie]. We’re absolutely stoked with the support from particularly that East Brisbane community… and we’ll be part of a real thriving beer scene out there.”

While the new DogTap Brisbane opening is set for October, plans for a site in Melbourne have also come to fruition.

“We’ve recently become very confident that we’ll be able to announce the site in Melbourne which will open, hopefully in the next few months. So we will have a site in Melbourne by the end of the year and all being well, there will be a site in Sydney as well,” McDonald said.

But the search goes on for sites elsewhere, as BrewDog will not be stopping at three state capitals.

“We’re actively looking at the Gold Coast. We’d love to live on the Sunshine Coast, and we’re looking interstate as well. So that’s at least in pencil if not pen, but it’s just the start of a regional expansion plan really.”

While expansion accelerates In Australia, BrewDog globally has or is opening further DogTap and brewery sites, transplanting the BrewDog brand across the globe into very different sites and serving very different demographics.

“We’ve been a hospitality business for 11 or 12 years now – I remember when I started in Aberdeen we didn’t sell ciders or spirits, it was very much ‘this is a beer bar and that’s it’. But we’ve understood that that’s not how the market works – you’ve got to be flexible and adapt in terms of your offering.

“And that means the localisation of the menu like we do here, we have calamari on the menu here, which we would never do in the UK, down to beer range – we have way more 3.5 percenters on in Australia than we have in the UK [as well as being set to expand its lower alcohol range with a shandy later this year]

“When we go into somewhere like Fortitude Valley we really retain everything that is a core BrewDog standard, that amazing beer range, showcasing independent breweries wherever we can. We’re really proud of our all Aussie wine list, we try and showcase spirits. That ability to pivot into the local market has obviously stood us in good stead.”

Being an employer of choice

With focus in the Australian brewing industry on being an employer of choice for talent domestically and globally, BrewDog has also launched a share giveaway to employees.

Global CEO James Watt, currently embroiled in abuse of power allegations in the UK, said he would donate 5 per cent of his stake in the business to employees.

While this will not have a monetary value unless the business is sold or undertakes an IPO, BrewDog has suggested it could be worth AU$170 million, an estimation based on a valuation of the entire business at AUD$3.1 billion.

“It’s theoretical until it’s sold, obviously,” explained Ed Bott, “but what’s true about it is the ownership. We always say that we want people to act like owners, whatever section of the businesses they’re in …by giving those shares to the team, they actually are.”

On the retail side, McDonald explained that this is tied into the evolution of what BrewDog had previously called its Unicorn Fund.

“[That’s where] we split 10 per cent of our operating profit with our team. Now in the retail division, we’ve actually increased that as a 50 per cent profit share,” he said.

“So 50 per cent of the operating profit of DogTap Brisbane this year will be split equally between the team on a pro rata basis.

“We’re always happy to share numbers so we would estimate that there would be close to, hopefully a quarter-million dollars shared between the team here this year.

“And that’s a tangible benefit, a way to engage a team. We’ve always wanted to set the trends in hospitality and we’ve always proactively looked at ways we can be the best employer to work for. For me this is another global example of the way that we do that.”

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