My inbox this morning included a press release from the Scottish brewery BrewDog about their forthcoming operation in Columbus, Ohio, which will be funded in part by selling shares in the brewery via their “Equity for Punks” program. “$50M UNDERDOG: BREWDOG SET TO BLOW UP SMALL BUSINESS FINANCE IN AMERICA WITH THE LAUNCH OF EQUITY FOR PUNKS USA” reads the headline. Founder James Watt boasts in the release:
“Equity for Punks is a completely new business model in the States. It is a revolution in small business finance. It’s an opportunity to enlist the people of the nation that changed the beer landscape forever, and invite them to join our existing 46,000-strong global investor community and help us change the face of small business finance in the US as we share our passion for great craft beer. Few companies have been so bold as to turn their backs on traditional financial institutions in favor of a brave new world of community-driven business. We’ve pioneered the Equity Punk model in the UK, and now we’re bringing our unconventional approach to alternative business stateside.”
It’s an interesting business model and BrewDog has successfully used it to generate a lot of press. But why Columbus, Ohio? As with many of these craft beer expansion deals, I suspected that there were subsidies involved that the brewery omits from its press materials. Sure enough, Columbus Business First reported on their land deal back in 2015:
The project received state backing this year in the form of an eight-year, 60 percent income tax break, valued at $659,000, plus the support of Canal Winchester through a 15-year, 100 percent abatement estimated at $182,000 annually or $2.73 million over the 15-year term, according to info provided by the city. It also will waive some building, water and sewage capacity fees that tally up to about $320,000 in saved costs.
The total incentive package from the city is estimated at $3.45 million.
As I noted in my recent Reason article about the crony capitalists of craft beer, this is exactly what Watt advises in his book on business:
As well as the obvious places, there are several other ways to get more cash, legally of course. There are very often loans, soft loans, grants, job-creation assistance, tax relief and a myriad of other types of funding available from various public bodies, business development agencies, local authorities and government organizations. This type of funding is often very tough to get and intrinsically linked to job creation but given its potential to supercharge your growth it is definitely worth the effort. Over the years we have to become experts in maximizing the amount of grant support we could get into our business. Indeed, BrewDog has only been able to grow at the speed we have due to the amazing support we have received in the form of grant funding.
This doesn’t sound very punk, and venue-shopping to avoid paying local taxes doesn’t sound very community-driven either. And although BrewDog is hardly alone in seeking these sorts of subsidies — Stone, Deschutes, New Belgium, and Sierra Nevada have all played the game as well, often receiving significantly more in the bargain — they are particularly brazen about doing so while maintaining a public image of brash independence.
So don’t be fooled by the headlines. If you want to support scrappy, independent brewers making a go of it without millions of dollars in public subsidies, there are plenty of other options worthy of your business.