11th May 2012
Forward looking investors have to decide what is better value. They must select between six months of a chief executive's time and the same amount going into beer making and distribution facilities. It's a decision between institutional investors and "fanvestors", the near 6,000 beer drinkers who have backed BrewDog with their own cash as well as bar purchases. Finally, they have to choose between a global company with a marketing budget of tens of millions and one whose skilful use of social media has produced publicity and growth that its larger competitor can only drool over.
But before looking at what goes and does not go for the two models, Diageo investors have to work out who is to blame for the fiasco which saw the Guinness and Johnny Walker owners with interests from Malaysia to Mayo handing the micro-brewery countless millions of free publicity while generating bad headlines for itself.
If the chief executive can take the credit for successes – including a doubling of the Diageo share price over the past three or so years – then he should also take the blame for one of the most outrageous acts of corporate stupidity. This ensured that the many millions who had never heard of BrewDog and its Fanvestor financing now have the Scottish firm and it money raising strategy on their radar.
Last weekend, the British Institute of Innkeeping held an awards dinner for the Scottish drinks trade in Glasgow. It was sponsored by Diageo. BrewDog knew it had been voted "top bar operator" because it had been told so and the trophy had already been engraved with its name.
But for reasons still unexplained, Diageo executives told the organisers that they would withdraw future sponsorship if BrewDog was awarded the prize. Despite the engraving, the awards organiser tried to give the trophy to another firm which promptly refused to accept it.
Cue for BrewDog, which has based its success so far on its clever and low cost use of social media, to unleash a torrent of Twitter protest, ensuring that an awards evening which should have been of little interest outside the Scottish drinks trade went global.
Diageo has now been forced to grovel and apologise – the fate of those responsible for the costly and pointless pressure on the awards organiser is not known.
BrewDog's finance model appears to be unique in the UK outside of the music industry. Fanvestors are simply people who are enthusiasts for the product who have the money to invest in an idea.
How does fanvesting differ from other methods of raising finance?
What other industries could raise money via fanvesting?
Almost anything in the consumer arena. This could include:
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