BrewDog mulls £10m bond with 'annual payment in beer'

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
Updated
LONDON, ENGLAND - APRIL 29: A general view of a BrewDog bar signage in Camden Town on April 29, 2018 in London, England. (Photo by John Keeble/Getty Images)
A general view of a BrewDog bar signage in Camden Town on April 29, 2018 in London, England. Photo: John Keeble/Getty Images

The boss of craft brewery BrewDog is considering issuing a bond that would pay lenders partly in beer.

BrewDog founder James Watt this week posted on the brewery’s investor forum, floating the idea of an unusual debt instrument that would feature both financial returns and free beer.

“We are considering another £10m bond offering and this time we would pay the coupon 50% in beer and 50% in cash,” Watt wrote. “Meaning investors get an annual financial return and also an annual payment in beer!”

Watt said the funds would be used for distribution infrastructure and expansion in Germany, Australia, and the US. He asked investors for feedback on the idea on the forum.

Sophie More, BrewDog’s head of marketing, said there were “no plans at this stage, just testing out an idea.”

“We often involve our community with new ideas or potential plans to get their feedback,” More told Yahoo Finance UK.

BrewDog, known for its Punk IPA beer, has already launched two so-called “mini-bonds” — bonds targeting retail investors.

It successfully sold a £2.5m 4-year bond in 2016 that carried a 6.5% interest rate. Last year it raised £10m issuing a 4-year bond with a 7.5% interest rate.

BRIGHTON, ENGLAND - October 26th, 2018: Night view of Brewdog brewery pub facade with people sitting and drinking beer in the terrace, viewed from the opposite sidewalk, in Brighton, Sussex, England.
Brewdog brewery pub facade in Brighton, Sussex, England.

Both of its previous bonds entitled investors to a 10% discounts in BrewDog’s bars but did not include beer as a payment component.

The Scottish brewery is known in financial circles for its unconventional fundraising techniques.

BrewDog has raised over £70m through crowdfunding but in its earliest years used its own website and advertised on its cans, rather than using a crowdfunding platform.

Earlier this year began accepting cryptocurrency in exchange for shares as part of ongoing fundraising efforts.

Founded in 2007, BrewDog had revenue of £171m last year. It made an operating profit of £832,000 but a pre-tax loss of £576,000. As well as breweries in Scotland, the US, Australia, and Berlin, the business operates over 60 bars globally and owns a beer-themed hotel.

Brewdog was valued at £1bn in 2017 when it raised £213m from US private equity fund TSG Consumer Partners.