Two months after a BBC One documentary aired former and current employees’ criticism of the Scotland-headquartered global beer company BrewDog, there are signs the protracted conflict poses a risk to BrewDog’s stated goal of an initial public offering (IPO) on the London Stock Exchange. BrewDog declined to say whether the IPO, once slated for 2020 at a company valuation of £2 billion ($2.6 billion U.S.), remains a plan.
Revelations that Watt hired private investigators to scrutinize his critics, first reported by the Guardian, have escalated tensions between Watt and former employees. Watt has repeated his belief that “there are a handful of people on a criminal mission to bring [BrewDog] down,” and stated that “a criminal prosecution” is now underway. In response to those allegations, some former employees have also invoked legal protections.
Given its ambitious plans, including an IPO and continued expansion around the world, BrewDog requires the confidence of investors and the larger business community to hit its marks. But as the company and one of its co-founders continue to make provocative headlines, BrewDog becomes an increasingly risky candidate for investment.
Before allegations focused on what former employees describe as BrewDog’s “toxic” company culture, the main story circling the fast-growing company was its path to going public. Its global network of bars and breweries indicated an organization that was comfortable gambling on ambition—and for nearly its entire existence, it had won by doing so.
But events in recent months have shown that BrewDog’s popularity with drinkers may be less important than its business reputation. The longer and more serious the dispute between Watt and former employees becomes, the more BrewDog risks becoming a pariah within the brewing industry. Already, there are signs the company’s reputation as a business—and its ability to prove its literal worth—are fading.
Paperwork filed on March 8 shows that Scottish craft brewery Pilot Beer bought back shares of its company, amounting to about $39,500, that previously belonged to JBW (77) Limited, a company James Watt controls. Patrick Jones, Pilot’s director, confirms that while the move was finalized in March 2022, his brewery made the decision in spring 2021. Jones says BrewDog initially promised to invest in Pilot Beer in 2015 as part of its BrewDog Development Fund, a program launched in 2014 to invest in and grow small craft breweries.
According to Jones, the initial decision to buy out Watts wasn’t related to BrewDog’s conflict with former employees, but public allegations of toxicity at BrewDog “of course made it more pressing for us to get it all done.”
“How that organization has been, whoever’s side of that story you accept, it’s not something that benefited us to be associated with,” Jones says.
Jones says that in 2015, BrewDog informed Pilot Beer it was suspending its development program. He says that subsequently, Watt—through JBW (77) Ventures—offered the same equity investment the original BrewDog program had, and Pilot Beer accepted. Until last spring, Pilot wasn’t in a financial position to buy back those shares, which amounted to approximately 10% of the company. Pilot Beer hadn’t had direct contact with Watt for years, Jones says, and was finally, in early March, able to sever their financial relationship via the buyback. (BrewDog declined to make anyone from the company available for an interview or to answer questions via email.)
The distance Pilot Beer has put between itself and Watt is a microcosm of a potentially much larger problem for BrewDog: a crisis of confidence in its leadership and business. It echoes a decision Manchester, England’s Cloudwater Brew Co announced in January, the same day the BBC One documentary aired, to cease supplying Cloudwater beers brewed at BrewDog to Tesco supermarkets as part of its Beers With Big Ideas program. The Manchester Evening News reports that while Cloudwater didn’t expressly link the decision to the documentary’s revelations, it did sever its contract with BrewDog earlier than originally intended.
“When the contract was produced, the opportunities, outlook and the context for this agreement looked very different,” Cloudwater said in a January statement.
Punks With Purpose, a collective of former employees lobbying for better treatment of workers at BrewDog, addresses business-to-business relationships with BrewDog in a section of its website titled “Working With BrewDog.” It advises businesses to protect their intellectual property, never accept equity in BrewDog as payment, and to “be prepared to be ran ragged by constantly changing plans.” This guidance paints a picture of a company that other businesses should be wary of working with.
John West, editor of financial publications Mergermarket and Dealreporter, tweeted in response to the Guardian’s story about BrewDog using investigators to gather research on former employees that “I think there’s a segment—a large segment—of the investor community you’d want onboard for an IPO who are wary of—or have been burned by—cult-of-personality ‘don’t play by the rules’ stories.” The callout was a reference to BrewDog’s “punk” ethos and Watt’s leadership. He also suggested that greater consideration toward environmental, social, and governance factors would help potential investors perceive BrewDog as a less risky investment.
West’s tweet hints at a question posed even more explicitly by James Norris, a senior writer for private investor website The Armchair Trader. In a January article titled “Excitement rising over BrewDog IPO this year, but when will it happen?” Norris asks in a bold subheadline: “Is BrewDog all about James Watt?” Norris lays out the conundrum facing potential investors as Watt remains BrewDog’s figurehead: “Although Watt is the focus of the allegations, he is also the driving force behind the company’s success.”
Fundamental questions about leadership are especially troubling for a company planning an IPO above $2 billion. That’s already rarified air: According to business analytics database CB Insights, there are 1,000 companies globally valued over $1 billion, dubbed “unicorn companies.” In the context of an IPO, billions of dollars hinge on BrewDog’s ability to convince investors of its soundness.
Amidst a publicity crisis, Watt has stood alone as a voice condemning critics and threatening legal action against people he sees as conspiring against him and BrewDog. Watt does, however, have a co-founder in Martin Dickie, who has been almost entirely silent in recent weeks. In contrast to Watt, he hasn’t posted or shared any content on LinkedIn related to the Guardian article or Watt’s allegations of a criminal conspiracy. Through a spokesperson, BrewDog declined to explain whether Dickie shares Watt’s assertion about the perceived conspiracy, and also declined to explain Dickie’s day-to-day role with BrewDog.
In a March 14 LinkedIn post published the same day as the Guardian’s story about Watt’s private investigators, Watt writes that his audience—the global business community— “deserve[s] a bit more of an explanation as to what is actually going on here.” It’s an acknowledgment that the cacophony surrounding the company can’t be avoided, in spite of his defiance and desire to focus on “future opportunities” for BrewDog. In contrast, Dickie’s most recent LinkedIn posts have focused on his dog’s birthday and the launch of BrewDog’s soda line.
Former employees and their allies are pushing back—potentially legally—against Watt’s claims of a criminal conspiracy. They cite an internal BrewDog culture review completed in December 2021 by the consulting firm Wiser, which found that “former employees had more negative perceptions [than current employees], but wanted to use them for good.”
Hospitality consultancy Hand & Heart—which launched an Affected Workers Platform in conjunction with Punks With Purpose—states that it is providing “legal support to those who feel they have been falsely accused of criminal activity or their involvement has been purposefully misrepresented.” This includes covering financial costs for legal aid. Hand & Heart’s managing director Kate Bailey says no registrant with the Affected Workers Program nor any founding member or spokesperson for Punks With Purpose has been made aware of civil or criminal legal action pending against them.
For all of the controversy surrounding Watt and BrewDog, the company still has vocal proponents. They defend and reassure Watt in the comments of his LinkedIn post, and say they continue to buy the company’s beer. Patrick Cooley and Marc Bona, reporters for the Columbus Dispatch and cleveland.com, respectively, say they’ve seen no drop-off in the popularity of the BrewDog bars and pubs in those cities.
“I tried to stop by [BrewDog Outpost Cleveland] in mid-December but it was so crowded as I drove by I bagged it to err on the side of COVID caution,” Bona writes in an email.
Former BrewDog employees have been clear in recent weeks about how damaging Watt’s characterization of them has been. One former employee, a member of Punks With Purpose, tweeted on March 14: “I was frightened because I knew BrewDog, and their founder, would use any underhanded tactics that they had available to undermine and silence us.”
But Watt and BrewDog’s reputations are also on the line. As the company seeks future investors to fund its growth, the threat of aggressive and defensive legal action does little to encourage confidence.
Words by Kate Bernot