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The controversial co-founder of BrewDog is planning a comeback with a new beer company in which he will give shares to the retail investors who were wiped out in the sale of his Aberdeen-based brewer.
James Watt is set to launch the “Second Best” beer company and is exploring giving shares to the “equity punks” whose retail investments in privately held BrewDog were wiped out earlier this year when the company was sold.
Second Best would specialise in selling canned beer, rather than replicating the sprawling and costly empire of pubs that BrewDog amassed as it grew, people familiar with the matter said. Watt told the FT on Friday when approached for comment that it may, however, launch a couple of specialised beer-focused pubs.
“I feel an obligation to the Equity Punk investors,” Watt told the FT.
“I want to try to create the future of beer. Hopefully the second beer business I build with the community will be the best one.”
Watt is self-financing the plans and has no official launch date yet. He has yet to get all of the licences it would need for the new venture, he said.
The plans come two months after BrewDog’s brands, brewing facilities and some of its UK pubs were bought in a prepack administration rescue deal by US cannabis and drinks firm Tilray Brands for £33mn. Some 38 pubs not included in the deal closed immediately, leading to almost 500 job losses.
The sale was a fall from grace for BrewDog, which was once valued at £1bn but had grappled with widening losses in recent years.
Watt also made a bid for the company, as did Danish brewer Royal Unibrew. AlixPartners, which co-ordinated the sales process, said no offer was made at any stage of the process that would have preserved BrewDog in its entirety.
The tens of thousands of retail investors, or equity punks, who invested more than £75mn in BrewDog through crowdfunding between 2009 and 2021, were left empty-handed by the prepack rescue deal.
Their stakes had already been heavily diluted following Brewdog’s 2017 share sale to TSG Consumer Partners, a sale which handed Watt a £50mn payday.
The Equity for Punks scheme played on an anti-establishment ethos Watt liked to project for BrewDog, but critics said those who bought into the scheme had less protection and rights than if they had invested in a publicly traded company.
Many of the equity punks were already expecting to have lost out following the TSG transaction, which handed the private equity group preferential treatment and guaranteed a handsome rate of return that would squeeze out the retail shareholders unless the company grew massively.
At the time of the sale to Tilray Brands, Watt said on LinkedIn that he was “heartbroken for all of our brilliant equity punks who did not get the return on their investment they wanted.” In a later post, he added: “Let’s see, maybe the Equity Punk story is not quite finished yet . . . ”.
Watt, who is from Fraserburgh in Aberdeenshire, is hoping that handing the equity punks founding shares in his new venture will restore his reputation, according to people briefed on his thinking.
BrewDog, once at the forefront of the UK’s craft-brewing boom, had been forced into a restructuring process, blaming a “challenging economic climate” and “sustained macro headwinds”.
The company, which was founded near Aberdeen in 2007, tapped into the growing market for craft beers and expanded rapidly, drawing in drinkers with offbeat beverage branding such as Elvis Juice and Punk IPA.
However, its reputation was scarred in 2021 by employees’ claims of a “toxic” work environment and the company struggled to cope with Covid-enforced pub closures and rising competition.
Sales growth at BrewDog ground to a halt and it reported a fifth consecutive annual loss of £36.7mn for 2024.
Ahead of the sale, BrewDog had already begun to trim its portfolio, last month halting production of gin and vodka at its Aberdeenshire distillery and selling a Scottish rewilding estate it had acquired last year.
