Craft brewer sales hit £100m
BREWDOG has seen sales surge past £100 million and forecast further strong growth in 2018, but profits more than halved last year as the company ramped up investment in expansion.
In a year which saw the company valued at more than £1 billion following a £213m investment from private equity house TSG Consumer Partner, sales increased by 56 per cent to £112m as pre-tax profit dipped to £1.4m from £3.8m in 2016.
The Ellon-based brewer’s annual report also shows that the company has disposed of its interest in coffee shop operator Third Wave Coffee. Brewdog acquired a 33% stake in the business in 2016 in attempt to bring more daytime customers to its bars.
The brewer declined to comment on the reason for the disposal.
In what was a transformational year for the business, Brewdog opened a second brewery, in Columbus, a city between Chicago and New York, putting the site within 500 miles of half the US population.
The first batch of beer was produced in June, and helped drive North American sales to £4m, the first time the company has separated out the US and Canada sales.
Brewdog said it was “forecasting further strong revenue growth for 2018” as it takes advantage of a full year contribution from its Columbus brewery in the US.
A lease has been signed on a site in Brisbane, Australia for a third brewery, which Brewdog said would open sometime in 2019. It is also looking at sites in Asia, noting the scale of opportunity in China.
In addition, it launched a new spirits division in the year. Sales of these Lone Wolf products were described as “exceptional” in the first few months of distribution.
This year will also see the launch of a sour beer brewery after Brewdog hit a £10m target in the fifth incarnation of its Equity for Punks crowdfunding deal.
As of yesterday, that initiative had raised £13.8m and is open for a further 206 days.
The group said an increase in overheads reflected continued investment “in our senior people and teams as well as the impact of new bars together with the full year effect of Columbus and our Lone Wolf distillery.”
Writing in the accounts, co-founder James Watt, said: “2017 saw us shifting it up a gear across planet Earth. The past 12 months were an absolute rollercoaster of a ride as we sought to build a brand new blueprint for business.”
Earnings before interest, tax, depreciation and amortisation increased to just under £9m, from £6m in 2016, which Brewdog said validated its strategy of investing heavily in new capacity to scale the business whilst maintaining healthy profitability.
“We continue to re-invest these profits in our beer and people to underpin future revenue growth and solid profitability,” said the group in its accounts.
Part of its investment will pay for a hotel, which is being planned as part of a wider expansion of its Ellon base. The Doghouse, as the hotel will be called, is scheduled to welcome guests in the first half of 2019.
The group said it expects to see continued international expansion and further strong UK revenue growth in both the on-trade and off-trade channels.
Revenue has grown consistently at the firm, which is the leading craft brewer in the UK. In 2014 revenue was £29m, climbing to £45m in 2015 and £71m in 2016.
In 2017, Brewdog sales in the UK reached £89.9m, up from £58.5m. In its annual report, the rapidly-growing brewer, which has seen an average growth rate of 63% over the past six years, acknowledges that it accounts for only 0.8% of the total UK beer market. In Europe there was an increase to £13m from £9.8m. Rest of the World sales grew to £4.7m.
Brewdog aims to grow sales globally by pushing distribution further this year, continuing with an aggressive expansion plan which will be aided by the new breweries . It said: “The wider we cast this net, and the more countries we can extend into, the greater our opportunity to thrive worldwide.”
The total wage bill at the company was £22m, up from £14.8m in 2016, as a result of staff numbers increasing to 777 from 593, with 155 staff employed in production.
There were six directors in the group, who earned total remuneration of £1.1m. The highest paid director saw their remuneration increase by 16.3% to £214,000.
The more countries we can extend into, the greater our opportunity to thrive