beer industry tech symposium key note 2014
DESCRIPTION
TED-style keynote on how IoT and Big Data is changing forever the beer industry. Providing an alternative view of what will happen within the industry and how it has already changed forever. Warning: Many won't agreeTRANSCRIPT
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Welcome to Beer 2.0
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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.
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“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.
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Today’s Beer Industry is CLEARLY Big Business
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So What’s the Problem?
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Everybody in the supply chain is guessing!
What is worse is that everyone is making business decisions based on somebody else’s guesses.
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Leaving Money on the Table isn’t Cool
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When we guess, we leave money on the table.
“Yeah but we still sell plenty of beer, so what’s the big deal?”
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Ok, So Let’s See if it Really is a Big Deal or Not…
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PINTS OF BEER SOLD IN THE U.S. LAST YEAR
Source: MillerCoors, MotiveQuest, Beer Institute, Mgroup, GFK Research
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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
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This is about the same amount of cash that Harley-Davidson made in net income last year .
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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
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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
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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
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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
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Good Demand Matching Means This
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Not This
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Or This
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The Best Share Real Time, Actionable Intelligence
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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
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“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!”
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Should There be any Urgency in Evolving?
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The Dynamics of Beer isn’t Changing. It Already Has!
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Source: Craft Brewer’s Association
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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
SteadyServ Confidential: Do Not Copy or Forward
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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
SteadyServ Confidential: Do Not Copy or Forward
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Desired State: Big Data and BI Systems Intelligence
SteadyServ Confidential: Do Not Copy or Forward
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
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Every Industry Evolves. Even Beer.
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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.
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Every Industry Evolves. Even Beer.
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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.
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Millennials are the X Factor. Better gear up...
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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
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The Only Constant is Change!
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“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
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The Only Constant is Change!
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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.
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Don’t believe it?
Am I over-reacting?
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The Pace of Change is Accelerating!
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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.
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“Yikes. What to do?”
Invest in New Technologies & Information Systems
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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
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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…
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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…
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Why the Effort Matters
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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
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Don’t Despair, Solutions are Out There!
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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.
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Leverage Collected Depletion & Consumption Data
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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
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Plot Consumption, Social & Scan Data by Market
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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
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Build Predictive Intelligence Tools
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Micro-trends in on-premise today impact off-premise tomorrow
Source: SteadyServ/Intel
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Partner with Tech Experts, Develop, Pilot & Scale
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Better get to know technologies like iBeacon
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Beer 2.0 Cheat Sheet
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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!
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Beer 2.0 A Final Thought
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• 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!
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Thanks
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Steve Hershberger
@sthersh
@steadyserv
www.linkedin.com/stevehershberger
www.steadyserv.com
www. ikeg.me