Beer industry tech symposium key note 2014

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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 agree

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Beer industry tech symposium key note 2014

  1. 1. Welcome to Beer 2.0
  2. 2. 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. 1. The good old days of yesterday and volume share will never return. 1. Technology, information, systems and shared intelligence is as important as the beer itself. The One Who Knows More…Wins.
  3. 3. SteadyServ Confidential: Do Not Copy or Forward “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.
  4. 4. Today’s Beer Industry is CLEARLY Big Business SteadyServ Confidential: Do Not Copy or Forward
  5. 5. So What’s the Problem? SteadyServ Confidential: Do Not Copy or Forward Everybody in the supply chain is guessing! What is worse is that everyone is making business decisions based on somebody else’s guesses.
  6. 6. Leaving Money on the Table isn’t Cool SteadyServ Confidential: Do Not Copy or Forward When we guess, we leave money on the table. “Yeah but we still sell plenty of beer, so what’s the big deal?”
  7. 7. Ok, So Let’s See if it Really is a Big Deal or Not… SteadyServ Confidential: Do Not Copy or Forward PINTS OF BEER SOLD IN THE U Source: MillerCoors, MotiveQuest, Beer Institute, Mgroup, GFK Research
  8. 8. SteadyServ Confidential: Do Not Copy or Forward 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
  9. 9. SteadyServ Confidential: Do Not Copy or Forward This is about the same amount of cash that Harley-Davidson made in net income last year .
  10. 10. SteadyServ Confidential: Do Not Copy or Forward 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
  11. 11. SteadyServ Confidential: Do Not Copy or Forward 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
  12. 12. SteadyServ Confidential: Do Not Copy or Forward 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
  13. 13. SteadyServ Confidential: Do Not Copy or Forward Moving forward, in the new beer economy, you’ll have 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
  14. 14. Good Demand Matching Means This SteadyServ Confidential: Do Not Copy or Forward
  15. 15. Not This SteadyServ Confidential: Do Not Copy or Forward
  16. 16. Or This SteadyServ Confidential: Do Not Copy or Forward
  17. 17. The Best Share Real Time, Actionable Intelligence SteadyServ Confidential: Do Not Copy or Forward
  18. 18. SteadyServ Confidential: Do Not Copy or Forward Does the Three-Tier System Do the Same? Brewer Distributor Retailer Delayed and Incomplete information Little to No Consistent Information flow Relies Heavily on Internal Data and Purchased 3rd Party Aggregated Data
  19. 19. “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!” SteadyServ Confidential: Do Not Copy or Forward
  20. 20. Should There be any Urgency in Evolving? SteadyServ Confidential: Do Not Copy or Forward
  21. 21. The Dynamics of Beer isn’t Changing. It Already Has! SteadyServ Confidential: Do Not Copy or Forward Source: Craft Brewer’s Association
  22. 22. Welcome to SKUMAGGEDON: An Explosion of Choice 0 500 1000 1500 2000 2500 3000 3500 Q3 2000 Q3 2012 Q3 2013 Tap Availability Volume Growth SKU Growth Craft Beer: IPA Category Source: Beer Institute Craft Brewer’s Association, BMI, NRA SteadyServ Confidential: Do Not Copy or Forward
  23. 23. Current State: No Big Data or BI systems intelligence Brewer Wholesaler Retailer Out of Stock Event Time Knowledge of Out of Stock Events Knowledge of Out of Stock Events Beer Date Expiration Event Beer Expiration ID Beer Expiration Credit Request Change in Consumption Trend Marketing/P romotion Event Impact/RO I of Marketing/ Promotion Event Knowledge of Change in Consumption Trend Knowledge of Change in Consumption Trend ? Timely Accurate Data Sporadic Partially Accurate Data Delayed and Inaccurate Data Little to No Data SteadyServ Confidential: Do Not Copy or Forward
  24. 24. Desired State: Big Data and BI Systems Intelligence SteadyServ Confidential: Do Not Copy or Forward Brewer/Bra nd 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/Hype r-Local Marketing/P romotion Events Impact/ROI of All Marketing/Promotion Event and Continued Localized Trending Knowledge of Change in Consumption Trends Local/Hype r-Local Marketing/P romotion Events Timely Accurate Data Sporadic Partially Accurate Data Delayed and Inaccurate Data Little to No Data
  25. 25. Every Industry Evolves. Even Beer. SteadyServ Confidential: Do Not Copy or Forward 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.
  26. 26. Every Industry Evolves. Even Beer. SteadyServ Confidential: Do Not Copy or Forward 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.
  27. 27. Millennials are the X Factor. Better gear up... SteadyServ Confidential: Do Not Copy or Forward 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
  28. 28. The Only Constant is Change! SteadyServ Confidential: Do Not Copy or Forward “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
  29. 29. The Only Constant is Change! SteadyServ Confidential: Do Not Copy or Forward 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.
  30. 30. SteadyServ Confidential: Do Not Copy or Forward Don’t believe it? Am I over-reacting?
  31. 31. The Pace of Change is Accelerating! SteadyServ Confidential: Do Not Copy or Forward There are more than 15 companies with valuations well north of a billion dollars that did not exist 20 years ago. Source: Wall Street Journal 87% of 1955’s Fortune 500 DOES NOT EXIST TODAY.
  32. 32. SteadyServ Confidential: Do Not Copy or Forward “Yikes. What to do?” Invest in New Technologies & Information Systems
  33. 33. SteadyServ Confidential: Do Not Copy or Forward 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
  34. 34. SteadyServ Confidential: Do Not Copy or Forward 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…
  35. 35. SteadyServ Confidential: Do Not Copy or Forward 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…
  36. 36. Why the Effort Matters SteadyServ Confidential: Do Not Copy or Forward 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
  37. 37. Don’t Despair, Solutions are Out There! SteadyServ Confidential: Do Not Copy or Forward 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.
  38. 38. Leverage Collected Depletion & Consumption Data SteadyServ Confidential: Do Not Copy or Forward Understand the impact of brand and product mix Know the impact of competitive Pressure 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
  39. 39. Plot Consumption, Social & Scan Data by Market SteadyServ Confidential: Do Not Copy or Forward 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
  40. 40. Build Predictive Intelligence Tools SteadyServ Confidential: Do Not Copy or Forward Micro-trends in on-premise today impact off-premise tomorrow Source: SteadyServ/Intel
  41. 41. Partner with Tech Experts, Develop, Pilot & Scale SteadyServ Confidential: Do Not Copy or Forward Better get to know technologies like iBeacon
  42. 42. Beer 2.0 Cheat Sheet SteadyServ Confidential: Do Not Copy or Forward 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!
  43. 43. Beer 2.0 A Final Thought SteadyServ Confidential: Do Not Copy or Forward • 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!
  44. 44. Thanks SteadyServ Confidential: Do Not Copy or Forward Steve Hershberger @sthersh @steadyserv www.linkedin.com/stevehershberger sthersh@steadyserv.com www.steadyserv.com www. ikeg.me

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