Brew­dog’s VP of in­no­va­tion talks Bit­coin adop­tion

Could Brew­dog’s de­ci­sion to take cryp­tocur­rency at its Ca­nary Wharf bar start a trend for re­tail­ers?

The Wharf - - Canary Wharf - Jon Massey

Brew­dog likes to por­tray it­self as a com­pany that does things dif­fer­ently. In a lit­tle over 10 years it’s gone from a brew­ing op­er­a­tion cre­ated and manned by two peo­ple and a dog to one em­ploy­ing more than 1,000 with 90,000 share­hold­ers fol­low­ing its Eq­uity For Punks crowd­fund­ing round last month. In 2017, it pumped out 343,253 hectare litres of beer – ris­ing from 1,050hl in 2007. A decade on, it still only lists one dog as an of­fi­cial em­ployee. What it has just added is a bar in Ca­nary Wharf and the abil­ity for its cus­tomers there to pay for their drinks in cryp­tocur­rency. Open­ing in the unit formerly oc­cu­pied by Jamie’s Ital­ian at Churchill Place, the bar is cash­less, packed with neon, bar games and craft beer, and ac­cepts Bit­coin and Bit­coin Cash along­side tra­di­tional plas­tic. Where bet­ter to dip a toe in the dig­i­tal money stream than Lon­don’s cap­i­tal of fin­tech, where Level39 is packed with blockchain wran­glers and ex­change cre­ators? That’s more or less the view of Brew­dog’s vice pres­i­dent of in­no­va­tion, Martin Demp­ster, who spoke to me af­ter the bar’s open­ing on Oc­to­ber 19. “I think we’ve sold around 300 or 400 pints over the first week­end in Bit­coin,” he said. “Fun­da­men­tally we’re quite an in­no­va­tive com­pany in terms of our beer and busi­ness model. This was just an­other way to of­fer peo­ple a dif­fer­ent way to pay. “It’s still very early in the cy­cle for this sort of dis­rup­tive tech­nol­ogy but we’re in­ter­ested in it and its abil­ity to change the way cer­tain parts of the fi­nan­cial mar­ket­place work. It’s quite pow­er­ful

‘‘ I think a lot of peo­ple have heard of Bit­coin but giv­ing them a way to use it is the best way to form an opin­ion on that Martin Demp­ster, Brew­dog

and it’s just quite an in­ter­est­ing ex­per­i­ment to see how it works.

“We’re pleased with the ini­tial up­take and, if it is suc­cess­ful, it’s some­thing we’d look to roll out to other Lon­don sites.”

Ca­nary Wharf is the brand’s 70th bar world­wide and its 10th in the cap­i­tal. That’s po­ten­tially a lot of pints to process, should en­thu­si­asm for crypto ramp up, but Martin’s not con­cerned.

“You’d be sur­prised how easy it is to set up, in terms of the tech­nol­ogy,” said the 36-year-old, who has a back­ground in com­puter sci­ence.

“All that’s re­ally re­quired is a cheap tablet de­vice, you down­load an ap­pli­ca­tion and then re­ally you’re set to ac­cept the pay­ments.

“In some ways the tech is quicker and eas­ier to de­ploy than the in­cum­bent tech­nol­ogy in terms of card pay­ments. Clearly the con­sumer up­take isn’t at the same level but the de­ploy­ment is easy.

“I think it’s just about giv­ing our cus­tomers more choice about how they pay and try­ing some­thing a lit­tle bit dif­fer­ent. Re­gard­less of your po­si­tion on how these tech­nolo­gies will work in the long term, it’s in­ter­est­ing to try to put this into peo­ple’s hands and see how it works.

“I think a lot of peo­ple have heard of Bit­coin but giv­ing them a way to use it is the best way to form an opin­ion on that. When we process the or­der, it’s all done in stan­dard cur­rency. Ev­ery­thing is priced in pounds. At the point of sale you type in that amount in pounds, it’s con­verted to an amount of Bit­coin and at that point it’ll look for a live ex­change rate.

“We lock that in for 15 min­utes and it gives a to­tal in pounds and in the cryp­tocur­rency. We take the pay­ment, which takes the Bit­coin out of their wal­let and trans­fers it to ours. We don’t have to re-price any­thing.

“It’s fair to say the risk is on the con­sumer’s side, but I think if some­one is hold­ing the cur­rency any­way, they’re in tune with the risks of do­ing so. It is fully trans­par­ent.”

Risk is not some­thing Brew­dog is look­ing to be­come “overly ex­posed to” given the his­toric volatil­ity of cryp­tocur­ren­cies. Its model is to con­vert back to Ster­ling rapidly.

“Dif­fer­ent re­tail­ers will have dif­fer­ent ap­proaches to this based on their risk tol­er­ance,” said Martin. “Our choice has been to con­vert it into Ster­ling and that makes the ac­count­ing process much sim­pler for us.

“We’ve worked hard to en­gi­neer all of the volatil­ity out of the so­lu­tion we’ve im­ple­mented.

“If adop­tion of the tech­nol­ogy in­creases over time, the rate at which the cur­rency is cir­cu­lat­ing round the econ­omy in­creases and that should lead to more sta­ble prices.

“With­out adop­tion we’ll see volatil­ity – if we do see more, we’re likely to see less.”

Martin, who joined Brew­dog af­ter spend­ing time work­ing in the USA and see­ing craft beer boom across the pond, said the com­pany’s struc­ture had al­lowed it to cre­ate a com­mu­nity around its op­er­a­tion with a clear fo­cus on growth now and as it rose to be­come a global busi­ness.

“We’ve just com­pleted our fifth crowd­fund­ing round – the first was in 2011,” said Martin. “That was in the after­math of the credit crunch – the banks weren’t lend­ing so we went out to the pub­lic.

“We raised enough to be­gin to in­vest in our brew­ing fa­cil­i­ties and tanks so that al­lowed us to ex­pand and we opened our first bar up in Aberdeen.

“Since then we’ve used crowd fund­ing as a way to get in­vest­ment into the busi­ness.

“It’s also al­lowed us to cre­ate a com­mu­nity around the com­pany (a pre­view event was held for share­hold­ers be­fore the open­ing of the Ca­nary Wharf bar).

“I of­ten talk about the broader mar­ket de­mo­graph­ics, which are sort of counter to craft beer.

“Over­all, beer sales are flat or in slight de­cline. You’ll of­ten see sta­tis­tics about the num­ber of pubs that are clos­ing and there’s a chal­lenge around ca­sual din­ing as well.

“For us, peo­ple are, over­all, drink­ing a lit­tle bit less but they’re re­ally keyed into the qual­ity of what’s in their glass.

That’s what we’re all about. Our mis­sion, as a com­pany, is re­ally to make peo­ple as pas­sion­ate about great craft beer as we are. We take that se­ri­ously.

“What was in­ter­est­ing for the pub­lic open­ing of Ca­nary Wharf was that there were a lot of peo­ple ap­proach­ing the bar in the days prior.

“As soon as we opened the doors, there was a big queue out­side. That was re­ally ex­cit­ing to see.

“When I first started with the com­pany, the craft beer land­scape was very, very dif­fer­ent.

“If you look at it now, it’s been a com­plete revo­lu­tion.

“Lon­don has a great beer his­tory and an un­be­liev­able beer cul­ture. There must be more than 100 craft brew­eries in the cap­i­tal and we’re re­ally ex­cited to play a small part in that.”

Just as craft beer has helped change the drink­ing habits of a gen­er­a­tion, per­haps Brew­dog’s foot in the cryp­tocur­rency door is a bell­wether for re­tail­ers in the cap­i­tal.

It’s cer­tainly a bit meatier than a crypto cash point in Shored­itch.

Brew­dog’s Ca­nary Wharf bar of­fers leather and games

Is pay­ing for a round in Bit­coin a step too far? Not at all, says Martin Demp­ster, vice pres­i­dent of in­no­va­tion

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