Craft beer’s popularity is certainly no novelty: European artisans have been concocting their characteristic brew for centuries, while today’s microbrewing community has been gaining strong momentum since the 1970s. Nowadays, craft has become a strong movement with a loyal following: In the U.S. and the UK the fandom regularly gathers at beer festivals, pub crawls, workshops, and exhibitions – even scavenger hunts!
Big breweries are reacting to this craft beer boom most prominently through buyouts: Since 2011, global beer giant Ab in Bev has acquired four microbreweries in the U.S. alone, the latest being Seattle-based Elysian in February. More recently, SAB Miller picked up London’s Meantime to enter the UK craft beer scene. Through the acquisition of microbrewers, these big brewers tap into a growing niche and expand those brands on a national – even international scale.
Turning craft beer into big beer requires tackling novel planning challenges targeted at rapid regional, country-wide or international growth. While there are a lot more aspects and business-wide dynamics associated with turning craft beer into big beer, I will focus my discussion on supply chain planning.
As they did in the beer industry’s beginnings, big brewers again must apply supply chain fundamentals and innovations to secure their success and stay competitive. So, how can you turn local into global? How can you transform microbreweries into thriving macro breweries? Use this 5-point checklist to guide your decisions:
5 tips to boost your microbrew supply chain
- Discard spreadsheets for an integrated, end-to-end planning solution
Growing volumes require better planning; production, stock, transport and demand planning will get increasingly complex over time as data becomes more comprehensive. Moving from micro- to macro brewing you will encounter loosely integrated IT systems; there will be one tool for forecasting, another for demand planning, a third for supply planning accompanied by numerous spreadsheets to oversee resource availabilities or machine maintenance to name a few.
This is not only inefficient, but a business risk when legacy systems and spreadsheets are maintained by a single person.
Planning on a bigger scale requires sophisticated planning systems that maximize your efficiency and optimize your company’s valuable assets: materials, plant and equipment, capacity, workforce and capital.
- Map your optimal distribution
Once acquired, a craft brewery can leverage the global brewer’s access to new distribution channels, markets and customers. As a result, the distribution of finished goods and containers has to be consolidated. Ideally, your planning system should optimize distribution based on delivery routing, costs and transport capacity, while taking into account stock levels to determine the lowest-cost transportation schemes.
The result? Improved stock availability and customer satisfaction by ensuring deliveries are always on time, in full (OTIF).
- Plan for demand and never miss another opportunity
Craft beer is popular – so popular, in fact, that it may actually run out.
Craft brewers are often constrained by hop-profiles and availability. As a result, they might miss out on lucrative opportunities by being out of stock. Once a small brewery becomes a macro brewery, stocking out your off-trade channels is simply not an option – the right beer needs to be available at the right time, otherwise retailers will fill their shelves with readily available alternatives.
With the right demand planning solution, you can respond to changing and growing demand, even when your underlying product is subject to highly volatile demand.
Put your current supply chain planning solution to the test and use these 10 questions to determine your ability to plan for profit.
- Establish end-to-end quality assurance
A crucial factor for growth is the maintenance and upholding of product quality and integrity. Best before dates, production data and age, material availability, damaged packaging and product quarantine, are some of the concerns that have to be addressed throughout the whole beverage supply chain. As your operations grow, the need for an integrated platform intensifies. The right planning technology would give planners end-to-end visibility and full control to step in whenever an exception occurs.
- Optimize your keg utilization
Higher on-trade volumes require the keg return cycle to operate more efficiently. Practically speaking, the keg cycle time has to be reduced: containers need to be returned, cleaned and refilled faster to service the market in full and to minimize capital expenditure on new kegs. An integrated planning system will determine the optimal flow of returned re-usable containers, taking into account container recovery and cleaning activities, and planning the delivery of container to production and filling operations.
Our 5-point checklist gives insight on how to boost the supply chain of a microbrewer in order to turn it into a thriving macro brewer. With overall beer sales on the decline, the craft beer segment offers big brewers an opportunity to leverage a very profitable niche with a strong following.
What are your thoughts on the recent buyouts? Do you have the supply chain transformation processes ready to get started?
