‘You need to do what is right for your family’
Tones Lally, 2014
Camden have done very well.
Since launching formally in 2010 Camden Town Brewery have grown to be amongst the leaders in the craft beer segment in the UK. How have they done this? Hard work , good people and good decisions.
My understanding is that they invested relatively heavily to start the business formally back in 2010 (although the wheels where turning as early as 2006) and the growth over the past 5 years has been nothing short of spectacular.
They have differentiated themselves as a lager brewer (the most dominant beer style in the UK) at a time when hop forward craft pales were de rigueuer. They have a distinctive brand and name that plays on the celebrity of Camden Town, a popular, historic and eclectic part of London. Their slick branding and product marketing including the recognisable Hells brand, the successful launch of IHL and the Hells Raiser campaign are most likely the influence of their Chairman, renown ad man Sir John Hegarty and charismatic founder, Jasper Cuppiage.
Camden have built something amazing in their short history. An attractive spot under the railway arches in Kentish Town including a Brewery Bar known for hosting great events. They have a great range of core beers including the highly regarded Unfiltered Hells. They own a handful of their own pubs including the Horseshoe in Hamstead and the newly launched Camdens Daughter in Kentish Town. They have solid trade distribution across pubs in the UK, supermarket distribution with shelf space in both Waitrose (they got Waitrose to put a growler filler in a branch in Kings Cross!) and M&S as well has being in some high street and independent restaurant chains such as Bill’s, The Breakfast Club and Kerbisher and Malt. And they have attracted great, passionate people inspired to the cause.
Now to the numbers.
Turnover in year ending 2014 was £9m forecast to grow to £50m by 2020. Their Hells Raiser funding led to an initial valuation of £75m later reduced to £50m driven by a significant investment from a unnamed ‘Belgian manufacturing family’ that invested £10m into the business for a 20% stake. That was only in February.
And then they ‘sold out’.
Or ‘partnered with’ AB InBev in a deal announced on 21 December, where they became a wholly-owned subsidiary. By my very crude calculations, this deal will value to brewery at around £85m, (later confirmed in media reports) a nearly 70% premium, plus performance add ons over a 5 year period. As a Hells Raiser, this is a fantastic return in a very short period of time.
The rationale for the deal is to achieve the growth aspiration for the business; build the new brewery in Enfield, sell more beer through broader distribution, hire more people. And they will no doubt succeed with AB InBev’s backing. The money raised through the Hells Raiser campaign sadly not enough to do this.
So why all the fuss?
Craft beer thrives on its role as the underdog to the large multinational corporates who are renowned for producing ‘bland, fizzy lager’ through aggressive marketing and distribution tactics and cost cutting.
Furthermore AB InBev are on a roll employing a punchy, aggressive approach buying 3 craft breweries in the past 5 days. The ink is not even dry on their record breaking acquisition of SAB Miller but that hasn’t stopped them pulling out the checkbook for Camden Town, Colorad0-based Breckenridge Brewery and Arizona-based Four Peaks Brewery. Simply incredible.
The aforementioned acquisition of SAB Miller is potentially forcing them to review the SAB Miller portfolio, including Grolsch, Peroni and the recently acquired Greenwich-based craft brewery Meantime. An action that appears futile given the recent spending spree of AB InBev. Meantime’s fate is yet to be determined.
BrewDog, the UK’s largest craft brewer, steadfastly remains a dogmatic follower of the US Brewers Association definition of a craft brewery, dropping any craft brewers beer once an acquisition announcement has been made. They have put a long form statement out on their website today justifying their approach in a typical, colourful manner. https://www.brewdog.com/lowdown/blog/nailing-our-colours-to-the-motherfucking-mast
But Big Craft can work. In Australia for example, big beer owns or has stakes in a number of key craft brands including Little Creatures, White Rabbit, Mountain Goat, Matilda Bay, Bluetongue and Malt Shovel (brewer of James Squire). Competing alongside a number of independent craft brewers including Four Pines, Vale, KAIJU and Stone and Wood making fantastic beer. Goose Island’s Barrel Aging program is also held aloft as an example of Big Craft working.
Back to my opening quote.
This is wisdom was shared by my older brother and I think its appropriate in this context; Camden Town Brewery is the founder’s business. They have invested in and built this business from the ground up. Yes Hells Raiser have invested too, but guess what, on an investment where the return is not certain, they have received a 70% return in less than a year! That is incredible performance on any level. Yet they only own around 2% of the brewery. The owners did what they thought was best for their family and their business. Can you really begrudge them?
I wish Jasper and the team at Camden all the best for future. They are great people doing what they think is best. Yes a very small minority of their target market is not happy, but you know what, there are millions of customers who aren’t as invested emotionally that just might taste Camden as a result and be converted. And that is all that matters.
Note: Yes I invested in Camden back as part of their Hells Raiser campaign. More to follow in a past after Christmas.
BushCraftBeer 