BrewDog suffers ‘painful setback’ despite record half year results

Craft beer giant BrewDog has posted record half year results with revenue totalling £78 million, up 55% on last year, yet it has lost “hundreds of thousands of pounds” after a bottling fault led to it dumping all of the bottled beer due to be released as part of its OverWorks project.

The Scottish brewer published its half year results today (23 August), revealing record revenue and sales growth in the first half of this year.

Total revenue was up by 55% on last year to reach £78 million with the brewer’s bar division performing particularly well, with revenue up 92% generating an incremental £10 million.

UK retail sales growth also rose by 83% which BrewDog attributes to “heavy investment” in the off-trade, bar openings and its acquisition of independent pub and bar operator Draft House in March this year.

This, the brewer claims, has made it the 13th biggest beer brand in the UK with its flagship Punk IPA increasing its market share by 9.8% and value growth by 28.8%. This has been aided by partnerships with JD Wetherspoon and Greene King, which combined have added 1,200 draught Punk IPA distribution points, while in the off-trade, supermarkets Morrisons and Tesco have totted up an additional 1,900 and 6,000 distribution points respectively.

This year alone BrewDog has opened nine international venues, most recently its 32-room beer hotel in in Columbus, Ohio. Despite now having a brewery in the US and another in Australia which will open in early 2019, export volumes continue to increase, up 35% to 70,000 hectolitres with revenues totalling to £11 million. The US division of the company brought in revenue of £5 million in the first half of 2018.

Co-founder James Watt said the brewer was establishing “a solid and rapidly growing presence in the UK” while the company’s work in Asia and Australia “will begin to bear fruit in 2019”. He added that the “US business is expanding at breakneck speed with new distribution points added every week”.

Bottling fault

It has not all gone smoothly for the craft beer giant however. It announced earlier this week that its OverWorks project, a scheme designed to explore different methods of fermentation, had experienced a “painful setback”.

As it prepared to release the first batch of beers, it found that around one in ten of the specially developed 500ml Champagne-style bottles had “a catastrophic manufacturing defect”. It added that the issue was brought to light after routine handing “lead to numerous breakages”.

After further analysis, the bottle manufacturer said that the bottles were not fit to be released meaning that BrewDog has had to scrap all bottles that have been filled.

The brewer added: “This decision has not only cost us hundreds of thousands of pounds worth of stock and six months’ worth of production time, but also caused heartbreak and genuine disappointment in those who have worked so hard to get these beers ready”.

Not all beer was lost, however, and what remains is being bottled in replacement 500ml bottles while OverWorks kegged beers are being distributed to the brewer’s bars.

In addition to this setback, BrewDog has attracted criticism over its handling of a former employee. This month it was reported that James Ross has awarded £12,000 payout after the reporting of a deteriorating loss of eyesight led to his permanent suspension from BrewDog.

In July, the brewer also fell foul of industry regulations after a complaint about its special edition Pink IPA was upheld by the Independent Complaints Panel because it could appeal to children. It was also forced to search for another site for a bar in St Andrews, after St Andrews Brewing Co. announced plans to take over Rascals, which BrewDog had previously been in talks with.