Photographer: Jack Andersen/Getty Images

Beer Instead of Interest Is Brewer’s Answer to Record-Low Yields

A U.K. brewer is offering investors an alternative to record-low interest rates at home and negative bond yields in the euro area: bottles of its own craft beer.

Innis & Gunn Brewing Co. Ltd., which is based in Edinburgh, is offering beer coupons in place of interest payments on a 3 million-pound ($4.6 million) notes issue. It’s just the latest small company to embrace crowdfunding to raise cash.

The brewer will use the proceeds of the four-year sale to fund the construction of a new site. The notes offer gross annual interest of 7.25 percent for investments starting at 500 pounds. Investors opting to be paid in beer will receive the equivalent of 9 percent interest a year, the company said.

“The BeerBond is all about inviting our fans and the craft-beer community to invest to help us build this brewery,” founder and Chief Executive Officer Dougal Gunn Sharp said in a press statement.

Britain’s benchmark interest rate is 0.5 percent and government bonds maturing in July 2019 yield 1.1 percent.

The deal is similar to a model used by Mexican food chain Chilango, which last year offered “burrito bonds,” giving investors complimentary food on top of fixed-rate payments. Camden Town Brewery in London sought last month to raise as much as 3.5 million pounds by inviting customers to subscribe as little as 10 pounds each in return for equity.

Before it's here, it's on the Bloomberg Terminal.