(Kitco News) - When using gold as a promotional tool, you need to be as specific as possible, which is an expensive lesson one British beer maker made.
In a recent LinkedIn post, James Watt, CEO and co-founder of Scottish-based beer company BrewDog, said that he had to pay out nearly €500,000 ($571,000) after a Willy-Wonka-style golden beer can promotion went horribly wrong.
To promote his company, Watt said he hid 50 golden cans in cases of BrewDog beer. Along with the golden can, each winner would receive £15,000 in BrewDog shares.
However, the brewing company ran afoul of the U.K's Advertising Standard's Authority after customers discovered that what was promised as a solid-gold beer can was only gold-plated.
"We found an amazing goldsmith to make the cans for us, and when they arrived at the brewery, we were blown away by how beautiful they were," Watt said in his apology. "However, I got so carried away in the excitement of the project that I made some costly mistakes. I falsely thought the cans were made from solid gold when they were indeed only gold-plated. In my enthusiasm, I had misunderstood the process of how they were made and the initial tweets I sent out told customers of the prospect of finding 'solid gold cans.'"
In the social media campaign, Watt said he sent out three tweets promoting the "solid gold can."
"My initial tweets had been misleading and we deserved the flak. What was looking like one of the best campaigns in our history was now, decidedly, the worst," he said.
The customer complaints ended up making national headlines throughout the U.K. and Watt said that to make things right, he reached out to all 50 prize winners and offered to pay them. He ended up paying 40 prize winners €15,000 each, the estimated value of each can.
"All in all, it ended up costing me around £470,000 – well over 2 and a half years' salary," he said.
An average beer can weigh about 15 grams or slightly less than half a troy ounce. Spot gold is trading at €1,546 an ounce against the British pound, so a solid gold can would contain €773 ($939) worth of the precious metal.
It's not surprising that some U.K. consumers are more sensitive than usual when it comes to gold. According to reports, market turmoil in October caused by domestic political uncertainty drove investors to the precious metal.
Analysts have also noted that investors are buying gold and silver bullion to hedge against economic uncertainty and rising inflation pressures.
In a recent comment to Proactive, Andrew Dickey, Royal Mint's director of precious metals investment, said that there has been a significant increase in small-scale investors "dipping their does into the precious metals markets."
"1g and 5g gold bars proved particularly popular in the lead-up to Christmas," Dickey added. According to data from the Royal Mint, sales of gold bars under one troy ounce jumped 46% in December from November.
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