As brewer builds capacity

Brewdog invests in BrewLab coffee outlets

James Watt and Martin DickieBrewdog, the north-east based craft brewer, has acquired a 33% interest in Third Wave Coffee which operates Brew Lab outlets in Edinburgh.

It is thought that it wants offer coffee as a means of luring more customers into its bars during quieter times of the day.

BrewLab is owned by David Law and Tom Hyde who have an outlet in South College Street and recently opened a second in a converted lock-up garage in the west end (pictured below).

The acquisition of the stake is buried in the notes to the brewer’s annual results where it states that the directors “consider the group share of the financial results for Third Wave Coffee Limited for the period from acquisition are trivial and as such have not accounted for these within the group financial statements.”

Brew Lab 2Brewdog more than doubled sales in the UK last year and said its growth would have been greater if it had been able to meet demand.

Group revenue grew 51% from £29.6 million to £44.7m but by 131% in the UK where it has been the fastest growing food and drinks company in the UK for the last four years. Pre-tax profit fell slightly from £3.65m to £3.47m.

The craft beer category is growing rapidly both in the UK and overseas in a declining beer market. The US leads the way with craft beer on track to be 20% of total beer volume in the US by 2020. The craft beer boom is now spreading to Europe and parts of Asia and South America.

BrewDog says its biggest challenge in terms of growth has been keeping up with the demand for its beers. It now brews 65 beers and has 45 bars around the world, 16 of which opened last year. The company employs 580 staff.

Brewdog has invested £20m in its Ellon brewery giving it the beer making capacity to meet projected growth. It is investing $25m in a brewery in Columbus, Ohio which will be ready in September 2016.

Co-founder and ‘captain’ James Watt (pictured above left with co-founder Martin Dickie) said: “As well as being a great year in its own right with very solid growth and profitability, 2015 was also all about laying the foundations for our next five years of future growth.

“Over the last 12 months we have invested heavily in the brewing capacity, the infrastructure and the personnel to enable us to really put a dent in the world of beer.

“We grew our UK sales by 131% in 2015 but this number would have been higher had we been able to meet the demand,” it said in its annual report and accounts.

“However we have made significant investments in the last 12 months, both in the UK and overseas, to give us massive increases in capacity which should stand us in great stead for years of sustained growth.”

The company said the investment in its Ellon brewery means that “2016 should have a significant and positive impact on our 2016 gross margin as we are able to brew our beers more efficiently.”

It added: “In 2015 we still generated a very healthy trading profit which was comparable to our 2014 trading profit number. The plan is to continue to invest all profit into fuelling further growth as we continue to invest in our beer and our people. We have been a high growth company since we started, but that high growth has always been underpinned and driven by solid profitability.”



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