Craft brewer and pub operator BrewDog has reported its third year in a row of hefty losses.
The company, based in Ellon, Aberdeenshire, was last profitable in 2019.
Since then, when it notched up pre-tax profits of £1.1 million, it has posted losses of £12.5 million for 2020, £9.4 million for 2021 and – in its latest annual report – £30.5 million for 2022.
Recent loss-making has coincided with the firm shutting some of its UK pubs, citing rising costs and the energy crisis.
Viva Las Vegas
But it has also pushed on with international expansion, including a new bar in the heart of Las Vegas, and recently announced plans to open more bars in UK airports and railway stations.
And the latest losses were generated by a much improved sales performance, with revenue up more than 12% at £321.2 million.
BrewDog said the sales growth reflected a “return to more normal trading following the pandemic”.
It added: “Global bars achieved revenue growth of 69% in 2022, from 2021, reflecting the strong return of the hospitality sector bounce-back, despite continued pandemic restrictions in place in Europe and the Far East for much of the year.”
Profitability hit by inflation and Russia’s ongoing war in Ukraine
The company said profits were impacted by significant cost increases “across all key inputs due to the supply chain pressures of post pandemic and the conflict in Ukraine”.
It added: “We were impacted by previously unprecedented increases in hops, malt, Co2, cans, bottles, packaging, food ingredients and utilities.
“Significant work was undertaken to mitigate the impact of these increases, with rationalisation and competitive tendering of suppliers, efficiency improvements in production and menu engineering in retail, which mitigated the impact of these increases to an extent. These efficiency improvements will continue into 2023 and beyond.”
BrewDog said operating losses of £24 million were “disappointing” but reflected its “significant investment in people, beer and the planet, together with the impact of the unprecedented supply chain and input costs”.
It continued: “Huge focus continues on growing the business, whilst also increasing efficiencies to improve the financial operating performance of the group.”
‘Culture of fear’
BrewDog has faced a storm of criticism in recent years following widely publicised allegations of bullying, sexism and a “culture of fear” prevailing within its workforce.
In his “captain’s update” in the 2022 annual report, co-founder and chief executive James Watt said being named as one of the Sunday Times’ best places to work was a “massive moment” for BrewDog and “proof that our people are at the very heart of our company.”
He added: “Appearing on this list is something we are incredibly proud of, and shows we have a wealth of incredible people in our ranks.
“We’re committed to giving them the best possible opportunities in their career.”
Mr Watt said 2022 was a “very challenging year”, adding: “In the wake of the pandemic, we were looking forward to a new normal – revitalised consumer spending and more opportunities to meet friends, gather and work collaboratively in office spaces.
“However, the catastrophic and devastating invasion of Ukraine stopped us all in our tracks as we witnessed the evolving humanitarian crisis.
The growth we have seen over the past 16 years is undeniable, with our own business growing from two men and a dog to the world’s biggest craft brewer by revenue.”
James Watt, BrewDog
“The invasion and the consequential impact on energy costs set in motion a vicious cycle of inflation, the likes of which have not been seen by this generation, and an economic crisis that has impacted all our lives.
“Despite increasing costs, and a very challenging economic outlook, we have an unshakeable confidence in the future of BrewDog. The growth we have seen over the past 16 years is undeniable, with our own business growing from two men and a dog to the world’s biggest craft brewer by revenue.
“This is no mean feat, and it’s a trend we absolutely believe is destined to continue.”
Conversation