Brewdog invincible as rivals flounder
Brewdog continued its inexorable rise towards retail dominance by growing off-trade sales 116% to £62.2 million in 2017 (Nielsen).
Last year, the Scottish brewer of “hardcore beer for punks” sold a 22% share to private equity firm TSG Consumer Partners, which also owns Pabst Blue Ribbon.
The deal valued Brewdog at £1 billion and its retail performance shows why the private equity firm was so keen to invest.
It has captured a 71% share of the UK off-trade craft beer market and accounts for the top five SKUs: Punk IPA, Elvis Juice, Dead Pony Club pale ale, Punk IPA in a 66cl bottle and the 0.5% abv Nanny State.
The 33cl Punk IPA remains the market leader, with annual sales flat at £9.7 million, but that is down to the success of Elvis Juice, which grew 508% to £6.3 million.
Dead Pony Club sales grew 56%, while Nanny State was up 26%, highlighting a soaring demand among UK shoppers for low-alcohol beers.
The growth shows no sign of slowing as Brewdog has just raised £12 million through crowdfunding to invest in new ventures, and will continue to raise money until October.
“It’s insane to see more than 20,000 people buy a piece of our business and, with interest still proving higher than we anticipated, we have decided to extend the opportunity to invest in our company until October,” said co-founder James Watt.
The main victim of Brewdog’s success has been premium bottled ale, long the off-trade darling for delivering sustained growth, alongside sparkling wine, gin and fruit cider.
But that growth has finally stopped and value sales were down 2% to £240.6 million in 2017, its first decline in a decade. It remains £153 million bigger than craft beer, but craft grew 98.5% in the past year and is quickly catching up.
Seven of the top 10 PBA brands showed declines and the only ones to record growth were Abbott, Old Crafty Hen and McEwan’s No 1.
Market leader Sharp’s Doom Bar, which had been delivering stratospheric growth, declined 0.5%, and Hobgoblin, Newcastle Brown, Theakston’s Old Peculier, Spitfire and London Pride all fell.
Standard pricing is now at its lowest in years as the percentage of PBAs sold on promotion rose to 67%.
Industry insiders are concerned. “I have been selling PBAs from day one and in all my time I can’t remember a decline,” said Bill Simmons, a beer consultant and former national account controller at Fuller’s. “Companies such as Hall & Woodhouse, Fuller’s etc are really suffering, even Doom Bar. Not only loss of volume, but margin too is being drained away. Will the supermarkets reduce shelf space? If standard price is at its lowest for 10 years, where do we go? Delistings for worst performing lines?”
Total beer was down 0.2% , but spirits and sparkling wine ensured the off-trade remained in growth.