BrewDog: Best in show
By CA magazine
31 March 2021
BrewDog is reinventing what it means to be a modern British business. CFO Niall McCallum CA tells Laurence Eastham why purpose drives the Ellon-based beer maker’s success.
BrewDog is a great Scottish success story. The brewery and bar chain, founded in 2007 by James Watt and Martin Dickie, had grown to £215m in revenue, 2,000 staff and 100 locations in 2019, before the pandemic struck. But the entrepreneurialism didn’t stop there. You’ll likely have seen the Ellon-based brewer in the news for producing hand sanitiser for the NHS, delivering free canned water and offering its bars to the government as makeshift vaccination centres. The initiatives are a reflection of the company’s disruptive, purpose-driven spirit, which informs just about everything it does.
Another of its pandemic-era innovations has been the hiring of Niall McCallum CA as CFO, with the intention of building a scalable finance function that may one day lead to an IPO. McCallum joined BrewDog from global materials firm Element Material Technology in October 2020, convinced by CEO Watt’s enthusiasm, the company’s irreverent energy and, of course, being a regular consumer of the product itself.
“The chance to be part of a team building a world-beater out of Scotland was the big draw. The more time I spent with the BrewDog team, the more it became a no-brainer,” says McCallum. “And the chance to work with a team that is only a two-hour drive from my family was a big appeal, too.” Prior to joining BrewDog, McCallum had spent much of the previous 20 years commuting to and from London. “You get used to seeing the same old faces on the 6:35 to Gatwick,” he says.
The business is a force for good and that’s at the heart of everything we do
Although its signature Punk IPA was the UK’s best-selling craft beer in 2019, BrewDog is as well known for its cheeky, often provocative marketing as for its products. Last year, the company announced its £30m carbon-negative programme, which includes reforesting 1,500 acres of the Scottish Highlands, under the banner Make Earth Great Again, a not-so-subtle jab at a US government that had exited the Paris Agreement on tackling global warming.
But the provocateur role that BrewDog happily plays belies a greater sense of purpose. There’s a tangible sense of responsibility to the environment, to employees and to customers. And it’s that purpose-led approach that clinched the deal for McCallum.
“BrewDog has that disruptor-type mentality,” he explains. “The business is a force for good and that’s at the heart of everything we do. I joined as we were launching the carbon-negative programme and speaking about it with James during the interview process was a huge attraction.”
The initiatives, internal and external, are almost too many to mention. There’s a salary cap: nobody can be paid more than seven times the entry-level wage upon joining. And that entry-level wage is set according to the real Living Wage campaign, too. BrewDog’s “Unicorn Fund” means 10% of its profit is shared equally with employees and a further 10% donated to charity. And there are regular equity raises – Equity for Punks – that allows anyone to buy Class B shares in the company. The most recent raise was launched in August 2020 and has raised more than £20m to date.
BrewDog recently became a B Corporation – a certification of “social and environmental performance” for those in the private sector. It’s a big undertaking, requiring an online assessment, supporting documentation, meeting legal criteria and several rounds of background checks. For BrewDog and McCallum, demonstrating the ethical credentials of the company in such a rigorous manner was certainly worth the 12–18-month journey.
“I believe we’re the biggest brewery to become a B Corp, and those values are central to the decisions we make,” explains McCallum. “It’s not just about making profit. It’s about what’s good for the environment and our community, and having those values wrapped into B Corp status is really powerful. What I’ve always loved is being part of a business that I’m proud to say I work for.”
McCallum acknowledges that there’s a commercial benefit, too. As customer attitudes evolve and purchasing habits skew towards more ethical choices, doing the right thing and doing the profitable thing are becoming ever-more closely aligned. A recent Ipsos survey found that 48% of customers are more likely to trust companies that have sustainability and social responsibility programmes.
“I started buying BrewDog beer long before I joined the company. You want to give your hard-earned money to companies that you think deserve it. When we announced our B Corp status, there was a spike in online sales. And when we announced our carbon-negative strategy, customer recognition went through the roof,” adds McCallum. “It also helps to attract the right quality and calibre of people to your business – those who are driven by the same things as you are. It’s self-enforcing in many ways.”
Fleet of foot
It’s likely that those values – and the playful communication of them – are behind BrewDog’s relatively buoyant experience of the pandemic. Meeting friends in a bar may have been off-limits for much of the last 12 months, challenging what had been a large part of the company’s business, but BrewDog would soon embrace new ways to reach its customers.
“The pandemic has been devastating for so many, including real challenges for our bars and on-trade customers,” he says. “But the teams showed real grit and determination in transforming our online channels into a significant driver of growth. And we believe that this will continue to evolve alongside our other channels.”
BrewDog hasn’t entirely closed its bars, either. As lockdown took hold in 2020, the company developed an app, BrewDog Now, to organise takeaway and delivery from its outlets. The idea has kept revenue alive at its bars and, crucially, kept many staff working. The company is currently planning for the bars to open in line with the government’s roadmap: outside spaces in April, then inside from June or earlier.
Adapting quickly to the new normal has enabled BrewDog to continue investing in its long-term growth strategy, a project that McCallum stresses is full steam ahead. The company is working with delivery partner Arrival to launch five electric vehicles in the London area, building an anaerobic digester, and investing in three wind turbines that will generate 2.4 megawatts, both initiatives servicing the main brewery in Ellon. And McCallum promises a “strong pipeline” of retail locations too.
“The important thing for me is making sure we always have an eye on the future, making sure we’re continuing to invest in the business. Post-pandemic, I believe we will keep on going from strength to strength. Whether it’s people, processes or systems, it’s about making sure we’re scalable to support business growth,” explains McCallum.
“When we enter a new geography, it starts with our community demand. It then builds with investment in a bar, or more, alongside distribution in grocery and online channels. When there is sufficient scale we will invest in a brewery. That’s the exact model we’ve successfully developed in America, Germany and Australia. And France is the next big area of opportunity for us.”
Teenage dream
McCallum is no stranger to the boardroom, having served as Group Finance Director at Element and previously Finance Director at consultancy firm Capita. But becoming CFO at BrewDog marks the realisation of a boyhood ambition.
“The reason I love being a CA and a CFO is being at the heart of business, where the action is,” he says. “I always wanted to be a finance director when I was young, but didn’t know how to get there. I didn’t have a network or family contacts to draw on. I studied accountancy and finance at university, which seemed like a good route, and then figured it out from there.”
A training contract with KPMG followed (ICAS President Catherine Burnet CA was his Audit Senior) and, on qualifying, he joined its corporate finance team, aiming to untangle the workings of business and understand more about what it meant to become an FD.
“As a 21-year-old, I was immediately in the same room as managing directors and the senior teams, getting to pick their brains, which was amazing. Moving to corporate finance and then private equity built on that,” he adds. “It offered exposure to buying and selling companies and looking at listing on the stock market. I was always going to end up as a finance director, it was just about finding the path to get there.”
Settled in Scotland, McCallum is trying to convince his 16-year-old daughter of the benefits of a career in accountancy. She is undecided for now, but McCallum has vivid memories of his early career.
“I had the most fun at KPMG,” he says. “Having that camaraderie with everyone and doing a good job for clients, it builds such a close bond that, 20 years later, I am still in contact with people I qualified with. Plus, you get absolute insight into business and how to build a career. The exams and qualification really put you in good stead for whatever is going to come ahead.”