Articles, Intellectual Property Valuation

Do you know your IP from your IPA?

Even an intellectual property newbie is aware that trade secrets should be closely guarded by any business owner. It’s what sets you apart from your competitors and allows you to provide a product to consumers that they otherwise couldn’t provide for themselves. So, what would happen if you opened your trade secrets treasure trove to the world, customers and competitors alike? Would your business fail? Would the world end? Would the value of your business plummet? Well, if you’re Brewdog, the answer is probably, no.

Brewdog, the expanding Scottish brewery and pub chain, has consistently maintained a light-hearted and transparent PR campaign in order to remain distinct within the alcohol industry. A most recent example of this the annual publication of ‘DIY Dog’, a 446-page document detailing every recipe to every beer they have produced, which was published on social media by the company’s co-founder, James Watt. Alongside a link to the publication, Watt noted, ‘this is all of our intellectual property and the keys to our kingdom.  This is the information that normal companies would guard with their lives.’

Metis Partners - Brewdog IP Strategy

The Value of Brand Loyalty

So, first off, we can hear you thinking, why did they do this? The answer, you guessed it, is rooted in intellectual property. Firstly, no established company lets a secret slip without calculating the associated risk. Yes, trade secrets are secrets for a reason, so your product is yours and cannot be replicated by competitors. This monopoly, if your product is any good, is critical to competitive advantage. But what if your competitive advantage wasn’t so much your product, but another critical intangible asset, your brand and reputation? Watt and his team calculated that the benefits, a strong PR campaign aligning with their reputation as ‘transparent’, outweighed the potential risks of losing their secret recipes to competitors.

The Importance of PR

This PR campaign has proven to be a continued success for the Ellon-based brewing company. Last year in an IP dispute with supermarket retailer Aldi, the brewers took to social media instead of seeking legal action. Aldi is famous for selling numerous big brand lookalike products, but it is always careful to use a very distinct brand name so there is no case for trademark infringement. As such, it is notoriously difficult to prevent Aldi from copying your product. On release of Aldi’s ‘Anti-Establishment IPA’ which had very similar branding to Brewdog’s best-selling ‘Punk IPA’, Watt tweeted about a new beer named ‘ALD IPA’ (pictured below). The new ALD IPA beer very clearly takes inspiration from Aldi’s name and logo for its packaging.  Perhaps more about pulling their leg than pulling pints!

Metis Partners - Brewdog & Aldi IPA

Things took an unexpected turn when Aldi responded by offering to stock ALD IPA in stores, Brewdog accepted the offer. What had started as a publicity stunt by Brewdog, resulted in a mutually beneficial arrangement for both parties. The overwhelmingly positive response the campaign received on social channels undoubtedly reinforced how the collaboration heightened both companies’ PR as well as their brand and reputation in the process. As Watt stated, ‘normal’ companies guard trade secrets with their lives, but Brewdog is no ordinary company.

When Brand & Reputation is More Important Than Trade Secrets

So, we have established why Brewdog have shared with us their trade secrets. But what is going to happen next? Has giving away a critical intellectual property asset affected the value of the business? There is no definitive answer without conducting a full intellectual property valuation, however, through this campaign, the Brewdog brand remains visible, even whilst a huge source of revenue, their pubs, remain closed due to COVID. Response to the annual ‘DIY Dog’ campaign has remained overwhelmingly positive amongst IPA drinkers and Brewdog fans; solidifying that the brewer knows its customers and how to best interact with them, ultimately enhancing its brand and reputation.

Despite Watt’s remark that the recipes to Brewdog’s beers were ‘all of our intellectual property’, the company still hold a vast number of trademarks, patents, branding and intangible assets that continue to set them apart in the Brewing Industry and establish a strong competitive moat around the business. So, you won’t be seeing your local supermarket with shelves of store brand ‘Punk IPA’ anytime soon. Indeed, there is little advantage to competitors using Brewdog’s recipes; as its unlikely any commercial brewers would gain substantially from re-creating any Brewdog beverages under a new name. Additionally, no home brewer possesses the machinery and means to reproduce Brewdog’s beers as per instruction, further mitigating the risk of releasing trade secrets to a wide audience.

Leveraging IP to Increase Brand Value

Brewdog’s decision to release a considerable number of trade secrets to leverage their brand value appears to have worked in their favour. However, publishing your IP is not something every brand should do- it takes careful calculation to know the risk is worth taking. Key know-how and internal processes are vital secrets that maintain your competitive advantage and ultimately increase the value of your intellectual property.

But don’t worry! There are still numerous ways you can increase the value of your brand and reputation without letting your secrets slip. An active marketing and PR strategy, entering and winning awards, maintaining an active presence at trade shows and industry-specific conferences and engaging more closely with customers, all support and enhance brand and reputation.

So, however you choose to invest in your brand, Brewdog has shown us an alternative approach which chimes with its loyal customers.  A calculated PR campaign can form an important element of an active IP strategy, increasing the competitive moat and increasing the value of the intellectual property assets and the business in the process.

If any of you budding home brewers out there do decide to give ALD IPA a shot, be sure to get in touch!

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