BrewDog wants to expand in China after the merger with Budweiser

Scottish craft beer group BrewDog will start brewing Punk IPA and other beers in China and will open more bars in the country after establishing a joint venture with Budweiser China, the largest international brewer in the market.

The privately held British craft beer maker, which was looking for a fresh start after delaying a proposed IPO and being confronted with claims of a toxic culture by employees, said it was looking to tap a new but growing market for craft beers.

The company also shifted its expansion away from its home UK market due to the impact of inflation on local brewing and hospitality operations, said BrewDog chief executive James Watt.

“We don’t want to own ‘big beers,’ but we do want to be a global beer company,” Watt said. “Most of our focus in deploying our capital is international. The environment in Great Britain is very challenging.”

BrewDog’s Punk IPA, Hazy Jane and Elvis Juice will be manufactured under the agreement at Bud China’s newly opened Putian craft brewery in Fujian province, while the goal is to open nine more BrewDog-branded bars to add to one already in Shanghai.

A similar collaboration follows in 2021 with Japanese company Asahi, under which BrewDog says it has since doubled sales in the country. Bud China is a division of Bud Apac, the publicly traded Asian brewery majority-owned by the world’s largest brewer, AB InBev.

BrewDog previously had a smaller China partnership with distributor Top Shelf and opened a bar in Shanghai in 2020. The new deal aimed to capitalize on the burgeoning thirst for craft beer in China, Watt said.

The group said production of craft brews in China had reached 6.5 million hectoliters by 2020, although that was dwarfed by more than 341 million hectoliters of beer produced in China that year, according to hops supplier BarthHaas. Local craft brewers are Jing-A and Pandabrew.

BrewDog made a pre-tax loss of £9.4m on net sales of £219m in 2021, the latest year for which accounts are available

The brewery, which is owned by private equity firm TSG, had planned to go public in London in 2020 but postponed the planned IPO as Covid-19 hit pubs and markets.

Watt said the company has no immediate plans for listing now but will try to establish a timeline in late 2023.

BrewDog was also criticized in 2021 when a group of former employees accused the brewer of a “culture of fear”. It made a number of changes following the allegations, including installing retail heavyweight Allan Leighton as chairman, but also said some of the claims were exaggerated.