BREWDOG – the country’s largest craft brewery – announced the closure of six of its UK pubs last week in a fiery statement which slammed the “clueless Government” for failing to take action on rapidly spiralling costs.
Soaring energy prices are threatening the existence of pubs across the country as the Government fails to get a grip on the cost of living crisis. But BrewDog has a raft of other headaches which could have contributed to its shock announcement on Wednesday it was closing around 20% of its UK locations, observers have suggested.
Nick Hyett, an investment analyst with the Wealth Club, told the Sunday National that recent controversies – including allegations of mistreating employees – could be affecting the company’s growth.
He said: “I think that the controversies are a particular problem for BrewDog because it sort of contradicts their core branding.
“Standing up for the little guy, sticking it to the man is kind of what BrewDog’s brand is all about, so that is an additional headwind.”
It was “too soon” to say definitively whether reputational damage caused by recent controversies surrounding the brewers had hit their earnings, added Hyett, who noted that all hospitality businesses were facing destructive pressures on their balance books.
While the business is still expanding rapidly – revenues were up 21% to £286 million last year, according to the company’s most recent financial statement and the firm was recently valued at as being worth $2 billion – the company was operating at a loss of £5.5m in 2021.
BrewDog, founded in 2007 by James Watt and Martin Dickie, has weathered numerous controversies over the years – some of which helped build the brand’s “punk” reputation, such as run-ins with the industry-run booze regulator the Portman Group, which aims to promote responsible drinking.
Advertising regulators have repeatedly upbraided the company for misleading or irresponsible marketing campaigns – but the firm hit back, saying the rules were rigged to protect “faceless” brewing giants while punishing smaller, independent companies.
In 2014, it issued an “apology” to the alcohol industry body for “never giving a shit about anything the Portman Group has to say and treating all of its statements with callous indifference and nonchalance”.
But controversies continued to mount, including run-ins with animal welfare protesters, the estate of Elvis Presley and a Birmingham pub called the Lone Wolf the firm was accused of bullying by threatening legal action against the boozer because the firm had launched a line of spirits bearing the same name.
THE company subsequently dropped legal action against the bar, with Watt saying the company’s lawyers had “got a bit trigger happy”.
Things came to a head in 2021 when 61 former employees accused Watt of fostering a “culture of fear” in an open letter which forced the company to apologise for the way it had previously treated employees.
Watt said at the time: “As a fast-growing business, we have always tried to do the best by our team…
“But the tweet we saw last night proves that on many occasions, we haven’t got it right. We are committed to doing better, not just as a reaction to this, but always; and we are going to reach out to our entire team past and present to learn more. But most of all, right now, we are sorry.
“It’s hard to hear those comments, but it must have been harder to say them. We appreciate that and we will endeavour to honour that effort and courage with the real change it deserves.”
PR guru Sue Rizzello said various upsets over the past 15 years would “chip away” at the company’s reputation.
RIZZELLO, who owns Remedy Marketing, said: “Leaders need to protect and nurture their reputations during the good times because it can be really hard when the bad times happen, like this.
“Hospitality is clearly under huge pressure, it’s interesting though that [BrewDog] have taken such swift action to close bars.
“It’s desperately sad, obviously for them, but also for its staff and all its Equity for Punks shareholders.
“You cannot help when you look at the history of the company [to see these] as a further chain reaction of controversies and issues dating back several years right through to the allegations of staff mistreatment in 2021.
“But all of these items chip away at the corporate reputation. Perhaps if they hadn’t had this history, they would be in a stronger financial position now.
“As a brand and reputation professional, I can tell you it’s absolutely vital people fulfil the promises they make and espouse the values they say they have – and this was at the root of some of the reaction around the staff mistreatment because it appeared to contradict that.”
A spokesperson for BrewDog said: “All staff have accepted roles in other Brewdog locations. There will be no job losses. This is part of the regular review of our portfolio.
“With rapidly increasing costs including spiralling energy bills, these bars were a substantial distance from being viable to operate.
“We continue to invest in new bars. BrewDog Waterloo, the UK’s largest bar, opened earlier this month and is performing above expectation.
“There are a number of bars under currently under construction in Ipswich, Durham, and Canterbury, and overseas in Paris, Dublin, Atlanta, and Brisbane. In early November, we open BrewDog Las Vegas, a 30,000 square foot bar on the Strip.”
