Alan Mahon is the co-founder of Brewgooder, a brewery with a conscience. The company invests 100 per cent of its profits into providing clean water for a million people in developing nations around the world. Now that his start-up has turned two, he looks back on the pros and cons of launching a social enterprise.
A start-up on a mission
Brewgooder isn’t just a traditional brewery with a social enterprise bolted on. It was created solely to fulfil a mission. That single-minded focus has been key to its success; it convinced Brewdog, the multinational beer maker, to make its beer under contract. The award-winning Scottish brewery would never have agreed to help a young rival in this way, had it not been a social enterprise, admits Mahon. “They make our beer for us, at cost, because they believe in our mission to bring a million people clean drinking water around the world,” he says. Without the support of a larger brewery, it is unlikely that Brewgooder would have got off the ground. “Our mission is pretty huge so we couldn’t risk making our beer in a shed,” Mahon says. “We needed to ensure that we produced high-quality beer from the outset, and Brewdog lets us do that, and make it available to everybody really quickly. Our collaboration with Brewdog was vital to the start of Brewgooder. It allowed us to build a brand that we knew we could scale.”
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Winning hearts and minds
Craft beer is a crowded marketplace. There are now more than 2,000 independent breweries active in the UK, a rise of 64% according to accountants UHY Hacker Young. But while all the other beer-makers are vying for a position using flavour, style and marketing, Brewgooder stands out from the pack. Mahon explains: “We don’t produce lots of styles or many types of beers. We’re defined by our mission: to increase our impact year after year.” This has resonated with customers and helped Brewgooder stand out from the competition – even though it produces just one product, a crisp, Pilsener-style beer.
Mahon says: “In our last financial year we grew 200 per cent. So far this year, we’ve already grown another 70 per cent. We want to keep up that momentum and double the company every year for the next two to three years. Ultimately, we want to reach a turnover of £5m by 2022.”
The growth conundrum
But there are downsides to creating a not-for-profit enterprise. Scaling social enterprises can be more challenging than growing for-profits, for example, because the growth can’t compromise the mission. Mahon explains: “The biggest challenge we face is around how we continue to grow as a social enterprise. Not that many businesses scale fast without investment. But we don’t want to grow our sales and our team if that means sacrificing the impact we make, so balancing growth and impact is a complex challenge.” Straightforward venture capital isn’t an option, as Mahon doesn’t want to be beholden to shareholders, so the business is exploring other financing routes. “We will have to be really smart and open up channels for people to fundraise for our charity and our goal,” says Mahon. “We are also seeking to work with mission-aligned people in the investment space who want to invest and help us make an impact rather than invest and cannibalise impact.
“I wish someone had sat me down and explained how beer works from a commercial point of view”
The mission isn’t enough
Brewgooder’s social focus has helped win over many consumers but it is not enough to ensure its survival. “I was very naive when we started out,” says Mahon. “I thought I could just put our mission out there and shift beer but it’s a lot harder than that!” Mahon had to hone his entrepreneurial skills and ensure that his firm was commercially viable and sustainable in its own right. “I wish someone had sat me down and explained how beer works from a commercial point of view,” he admits. “I’ve learned to obsess about new ways to bring our beer to market because that will be crucial to our success.”
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