beer industry tech symposium key note 2014

Welcome to Beer 2.0

SteadyServ Confidential: Do Not Copy or Forward

Three really important concepts for today:

1. Beer sales are down, yet there is more opportunity than ever. You just have to know more than your competitor.

2. The good old days of yesterday and volume share will never return.

3. Technology, information, systems and shared intelligence is as important as the beer itself.

The One Who Knows More…Wins.


“He who enters the battle well prepared will surely win.”-Sun Tzu

“Knowledge is power.”-Sir Francis Bacon

“Information is not knowledge.”-Albert Einstein

“Guessing is a really rotten business strategy.”-Lloyd C. Blankfein, CEO Goldman Sachs

This Has Been True For a Long Time.

Today’s Beer Industry is CLEARLY Big Business


So What’s the Problem?


Everybody in the supply chain is guessing!

What is worse is that everyone is making business decisions based on somebody else’s guesses.

Leaving Money on the Table isn’t Cool


When we guess, we leave money on the table.

“Yeah but we still sell plenty of beer, so what’s the big deal?”

Ok, So Let’s See if it Really is a Big Deal or Not…


PINTS OF BEER SOLD IN THE U.S. LAST YEAR

Source: MillerCoors, MotiveQuest, Beer Institute, Mgroup, GFK Research


Just here in the US, last year’s draft beer unsold opportunity cost was around

If You Do the Math the Answer is…

$690,625,000.00


This is about the same amount of cash that Harley-Davidson made in net income last year .


Relevancy drives engagement.

Relevancy is driven by context.

Context is driven by understanding.

Is it about a beer for an ‘occasion’?

Beer marketing isn’t just situational, it Is also social and psychological.

Capturing Opportunity


So, what do you really understand about your beer drinker?

Who exactly are they? What makes them tick? If you don’t know, how can you be relevant?

OR

Individuals Not Avatars


Beer marketing is obsolete. The tools we use today are slow, crude and inaccurate.

The market’s tastes and trends are outpacing us.

There is no way to effectively compete and win in this new age without a fundamental shift in our approach and the tools we use.

Welcome to Beer 2.0

Welcome to Beer 2.0


Moving forward, in the new beer economy, you’llhave to have your beer in the right place at the right time AND in the right mix.

The efficiency of the entire supply chain becomes more critical than ever before.

You’ll need to Demand Match your product for micro-trends like local tastes, culture, economics, social dynamics, as well as, the old favorites like seasonality.

Target does it. So does McDonald’s. Proctor & Gamble too. So does Ford. Nike. Nordstrom’s. Harrah’s. Coke and Walgreen’s.

We in beer do not.

Welcome to Beer 2.0

Good Demand Matching Means This


Not This


Or This


The Best Share Real Time, Actionable Intelligence



Does the Three-Tier System Do the Same?

Brewer

Distributor

Retailer

Delayed and Incompleteinformation

Little to NoConsistentInformation

flow

Relies Heavily on Internal Data and

Purchased 3rd Party

Aggregated Data

“Ok, it is a little broken. So what?

We are NOT in cars, consumer electronics or consumer packaged goods! These are commodities! We are BEER!

The Beer industry has been successful and highly profitable for….

DECADES!”


Should There be any Urgency in Evolving?


The Dynamics of Beer isn’t Changing. It Already Has!


Source: Craft Brewer’s Association

Welcome to SKUMAGGEDON: An Explosion of Choice

Q3 2000

Q3 2012

Q3 2013

0 500 1000 1500 2000 2500 3000 3500

Tap AvailabilityVolume GrowthSKU Growth

Craft Beer: IPA Category

Source: Beer Institute Craft Brewer’s Association, BMI, NRA


Current State: No Big Data or BI systems intelligence

Brewer

Wholesaler

RetailerOut of

Stock Event

Time

Knowledge of Out of

Stock Events

Knowledge of Out of Stock

Events

Beer Date

Expiration

Event Beer Expiratio

n ID

Beer Expiration Credit Request

Change in Consumption

Trend

Marketing/Promotion

Event

Impact/ROI of

Marketing/Promotion

Event

Knowledge of Change in

Consumption Trend

Knowledge of Change in

Consumption Trend

?

Timely Accurate DataSporadic Partially Accurate DataDelayed and Inaccurate DataLittle to No Data


Desired State: Big Data and BI Systems Intelligence


Brewer/Brand

Wholesaler

Retailer

Out of Stock

Events: Eliminated

Time

Knowledge of Out of Stock Events Prior

to Happening

Knowledge of Beer

Expiration Events Prior to

Happening

Beer Expiration

Events: Eliminated

Change in Local /Hyper

Local Consumptio

n Trends

Local/Hyper-Local Marketing/P

romotion Events

Impact/ROI of All Marketing/Promotion Event and

Continued Localized Trending

Knowledge of Change in Consumptio

n TrendsLocal/

Hyper-Local Marketing/P

romotion Events

Timely Accurate DataSporadic Partially Accurate DataDelayed and Inaccurate DataLittle to No Data

Every Industry Evolves. Even Beer.


The beer industry is undergoing tremendous change. Right now.

Change with massive implications that’s impacting everything.

It’s here whether you like it or not and it is not going away.

Every Industry Evolves. Even Beer.


iBeacon

Nah, the whole car thing is a fad Bob. I mean sure, it’s growing quick but it is still just a tiny fraction of horse sales. The demand for horses will NEVER go away. I wouldn’t worry about it.

Millennials are the X Factor. Better gear up...


Millennials will comprise more than one in three of adult Americans by 2020.

Millennials will make up as much as 75% of the U.S. workforce by 2025.

Millennials account for more than $1 trillion in U.S. consumer spending.

71% of young males preferred beer in 1992, 41% do so today

Source: Brookings Institute, Gallup, Beer Marketer’s Insights

The Only Constant is Change!


“The change is generational. Millennials do not want to drink their father’s beer.”

-Mike Mazzoni, beer industry guru

“There are more SKU’s than ever before, the familiar categories are blurring. We must innovate to take advantage of this new leaky bucket.”

-Jim Koch, Boston Beer

The Only Constant is Change!


The beer industry as we have known it for the last 50 years

IS NEVER COMING BACK.

Bud and Miller and all the lights will never return to dominant share glory

SO, INNOVATE, INITIATE OR EVAPORATE.


Don’t believe it?

Am I over-reacting?

The Pace of Change is Accelerating!


There are more than 15 companies with valuations well northof a billion dollars that did not exist 20 years ago.

Source: Wall Street Journal

87% of 1955’s Fortune 500 DOES NOT EXIST TODAY.


“Yikes. What to do?”

Invest in New Technologies & Information Systems


It isn’t about ‘more beer’ or ‘more categories’, it is about getting the right product in the right place at the right time

Invest in New Technologies & Information Systems


Develop contextual and actionable intelligence streams.

Know what is happening NOW in hyper-localized markets

Don’t underestimate the power of on-premise.

Engage directly with customers. Help them find the beers They want, when they want them. Social is your direct link to them.

Share in THEIR story instead of them sharing yours. Be relevant. Find the right context!

Maybe it’s Time to Re-Address Priorities…


Yeah, I know. All this sounds hard.

It SHOULD be hard.

“I don’t know. This sounds hard. I have a lot to do already…”

Maybe it’s Time to Re-Address Priorities…

Why the Effort Matters


Just the US on-premise market is LARGER than the total GDP of two dozen recognized countries.

Just the draft beer segment alone is 4x larger than The U.S. Smart Phone Market!

Source: Beer Institute, Wikipedia

Don’t Despair, Solutions are Out There!


Some thoughts and examples for you to ponder.

Oh, if contextual information and analytics are not yet your best friends, you’d better cozy up quick.

Leverage Collected Depletion & Consumption Data


Understand the

impact of brand

and product mix

Know the impact of

competitivePressure by

style, category,

size, trending

Know the impact of

dates, local weather and local events on

sales

Track real time sales

and depletions

against goals

Source: SteadyServ iKeg

Plot Consumption, Social & Scan Data by Market


Understand local consumption trends,

optimize brands, styles and CE vessel mix (1/2bbl,

1/6bbl, bottles, cans)

Hamilton, OH Centerville, OH Kettering, OH Dayton, OH Xenia, OH Huber Heights, OH

Know when, how and where to allocate staff,

marketing and promotional dollars, as

well as, focus social activities

Source: SteadyServ iKeg

Build Predictive Intelligence Tools


Micro-trends in on-premise today impact off-premise tomorrow

Source: SteadyServ/Intel

Partner with Tech Experts, Develop, Pilot & Scale


Better get to know technologies like iBeacon

Beer 2.0 Cheat Sheet


Here is how to be relevant in a Beer 2.0 world:

• Develop contextual & actionable intelligence streams.

• Know what is happening NOW in hyper-localized Markets (9 digit zip or down to specific locations)

• Don’t underestimate the power of on-premise. Figure out this black hole.

• Engage directly with customers, help them find the beers they want and when they want them.

• Share in THEIR story instead of them sharing yours. Be relevant. Find the right context!

Beer 2.0 A Final Thought


• Tap into the Internet of Things

• Share intelligence across teams

• Leverage Big Data

• Develop Fully Integrated Information Systems & Supply Chains

• Create Predictive analytics

• Adopt Mobile & Localization systems

• Learn & Benchmark from outside the Beer Industry

Beer & tech go together like a tasty black & tan!

Thanks


Steve Hershberger

@sthersh

@steadyserv

www.linkedin.com/stevehershberger

[email protected]

www.steadyserv.com

www. ikeg.me

mailto:[email protected]

http://www.steadyserv.com/

beer industry tech symposium key note 2014

Data & Analytics