BrewDog CEO James Watt has cast a downbeat assessment of economic prospects in the UK, bemoaning the impact of Brexit and high inflation on the Scottish brewer’s business.
In a televised interview with Bloomberg, the Brewdog chief said his company had diverted funds to other key markets including the US, Australia and Japan as a result of the UK’s decision to leave the EU.
He added Brexit had been “tragic for UK business” with “zero benefit at all” from an economic standpoint.
He said: “A lot of economic issues the UK has faced over the last 12 to 24 months; more inflation than other places, harder to do business, are as a result of the catastrophic decision to leave the EU.”
Explaining how Brexit had changed investment priorities for BrewDog, Watt said: “Most of our beer for Europe is manufactured in UK… As a consequence, we’ve now had to invest more in Australia, in Japan and America because of Brexit.”
He added: “The UK is a very difficult place to invest in at the moment. I think it is a very, very difficult place to do business. You put inflation on top of that – and inflation way higher in the UK than the US and Australia than the other places that we do business – and that gives us far more confidence to invest in other places.
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By GlobalData“Consumer demand hasn’t been dampened by inflation in those places to the same extent it has in the UK.”
Watt said a case of BrewDog beer now costs 40% more to produce in the UK than it did 18 months ago, due to inflation. He said the company was mostly having to absorb these costs to keep its drinks affordable to consumers.
“At a time that consumers have got less disposable income to spend we’ve had to absorb the vast majority of that cost,” he said. “We’ve just got to find that margin through efficiencies within our own business.”
BrewDog’s long-stated ambition to list has also been put on hold as a result of economic conditions in the UK, Watt revealed.
He said the company still planned to list on the London Stock Exchange, but only when valuations for what he termed “disruptive high growth consumer companies” had sufficiently recovered.
“If you look at where they are trading today versus two or three years ago, the multiples are massively suppressed given the market conditions,” he said. “We’re just waiting for that to come out in the wash a little bit.”
