'Virtual brewery' could float on stock exchange

A 'virtual brewery' started by former employees of Computer Associates and Red Hat could be listed on the Newcastle Stock Exchange by the end of the year.

Brewtopia, described by former Red Hat employee and now chief executive officer Liam Mulhall as "... a marketing experiment to see if you could bring a product to market that did not exist without spending money on advertising", succeeded by using a strategy Mulhall calls "viral equity".

The scheme sees would-be customers awarded a share in the company if they join its email list, an additional share each time they buy a case of its "Blowfly" beer and another share each time they encourage four friends to join the email list.

The idea has worked so well the company has more than 29,000 members in 29 countries and - fuelled by a web-based custom beer labelling tool that makes it possible for anyone to produce their own brand of beer - sold out of its product last Christmas.

Members of the email list were also polled to design the company's product. "The whole point of the business model was to be a beer company by the people for the people," Mulhall says. "The public built our business. They built and designed the product.

"We always said we would float the business and make the shares worth something. This is the closing of the loop."

The company therefore polled a section of its membership by email earlier this year and 97 per cent of responses approved the idea of the IPO, generating what Mulhall characterises "pledges" of AU$1.5m.

The company will use its float to fund a push into retail sales. "Unless you drop your stuff in a shop people don't believe you are a real company," Mulhall says. "Virtual and viral marketing have given us a great start. Now it's time for the next step."

Simon Sharwood writes for ZDNet Australia