(http://www.pastemagazine.com/blogs/lists/2014/07/4-awesome-ted-talks-about-craft-beer.html)
As I was trying to decide what my Media Moments blog was going to
cover, I decided to read through the Businessweek magazine I got in the mail
last week to find some inspiration. I came across an article about craft beer,
and realized it was a perfect topic for our class. Craft beer has
disrupted the worldwide beer market, creating a permanent revolution causing
large corporations to begin to panic. As overall beer sales have declined
in the US over the past few years, craft brewing has been increasing. In
2011, craft beer saw 13% growth, and according to Fortune magazine, although
craft beer still only accounts for 6% of all beer sales, anyone in the business
knows that craft beer will play a big part in the future of the beer
industry.
(Fortune
Article:
http://fortune.com/2012/11/15/big-beer-dresses-up-in-craft-brewers-clothing/)
So I personally love craft beer, and maybe that's the main reason
I chose this for my blog post, but as I was watching a Ted Talks video of Sam
Calagione (founder of Dogfish Head Brewery), I realized most breweries follow a
Lean Start-up approach. They start out as home brewers, making small
batches of beer, and test it out on family and friends. From there, they
tweak their products until they have something they feel they can go to market
with, and open up a brewery. Sam Calagione and Dogfish head started in
the early 90's, at a time when craft brewing was not a big thing. Today
they are one of the leading craft breweries and have paved the way for hundreds
of craft brewers.
Calagione started out making small batches of beer in his basement
and tested them out on family and friends. He would go to small beer
festivals where other brewers thought he was crazy for using the ingredients he
did. Despite criticism, Calagione persevered, and opened up a small
restaurant where he would brew small batches of beer to pair with the food.
He took inspiration from the craft brewing pioneers like Sam Adams and
Sierra Nevada, and strove to make "off-centered ales for off-centered
people." As the market for local and artisan food began to emerge, craft
beer began to see it's chance for growth. Dogfish Head has become the largest
craft brewery in the Mid-Atlantic, and stuck to their tradition of not
following the status quo.
(Ted Talks video with Sam Calagione)
(http://www.bostonmagazine.com/restaurants/blog/2013/02/07/dogfishhead_samcalagion/)
Another
company making a big impact in the craft beer world today, is making it even
easier for craft brewers to follow the Lean Start-up Approach. Brew Hub,
now located in Tampa, Florida with plans to expand to five regional locations, acts as
what I think of as a craft beer incubator. They have a facility where
brewers can pay to come in and use all of their equipment including laboratories
and brewing machinery to make batches of beer. This way, brewers don't
have to have all the expensive equipment needed to make large batches of beer,
and they can test out their product on the market before committing to having
their own facilities.
Brew hub is majority owned by billionaire investor Ron Burkle’s private equity firm, Yucaipa Companies. The next location is set to open in St. Louis in 2016. The St. Louis location and the Tampa location are expected to produce 75,000 barrels a year each. Brewers are locked in to 3- year contracts with Brew Hub, and they pay a negotiated rate per case for brewing.
(http://www.businessweek.com/articles/2014-09-18/brew-hub-helps-craft-beer-makers-expand-to-new-cities)
Questions
for discussion:
What
experience do you have with craft beer? Do you have a favorite brewery/beer?
How
do you think other industries or start-ups can follow the Lean Start-up approach
that craft brewers follow by starting out with small batches at home?
What do you think of the Brew Hub business model? Do you think they will help home brewers follow the Lean Start-up method to enter the market?
Do
you think that the large corporations that are losing market share to craft
breweries could use the Lean Start-up approach to try and win back some of the
market?
I am personally not much of a drinker and even if I was I just go with a simple beer that everyone else gets. I think that as I get older and go out with friends for a couple of beers that it is cool to have so many options and taste all of the different types. As much as I’d like to get out and try new things, I do not want to waste the money on a beer that I do not enjoy. I know sometimes they can give you a taste first but I hate being that pain in the ass, especially when the bar is busy. Right now, along the east coast (other than NYC), craft beer is not as popular as it is in the hippy city of Austin. Of course many people enjoy craft beers but they have a better and stronger market in eccentric cities like Austin, Portland, San Francisco, and more unique cities unlike industrial ones such as Pittsburgh where no manly man would be caught with a craft beer in their hand.
ReplyDeleteIn the video that Catherine posted, Sam Calagione mentioned how he made a couple of batches at home and they did not turn out so great. I think you should definitely experiment first at home many times before pursuing any of the beer recipes that you have but you just may not have the correct equipment in order to get the recipe perfect.
Brew Hub is such a brilliant idea and I’m not sure why no one else has thought of this before. Back in Pennsylvania my stepfather is a cofounder of a business incubator for students of Carnegie Mellon University. I know there are many of them around the U.S. but each one is so different and unique. I love the fact that each averaged sized cubicle, no bigger than my bedroom, are each different startups that could become something very successful. What Brew hub does that is different than all of the other incubators out there, is narrowing down the market to focus on one in particular. I have thought of many cool ideas and I thought well that is hard because I have to test it out first and I don’t have the necessary equipment, room, etc. With Brewhub, it allows everyone interested in creating his or her own recipe to put it to the test. I will have to conduct some research to see if there are other business incubators that are specific to one type of market. Perhaps they could make ones for mobile applications and supply mentors to advise them. This would be great for people with brilliant ideas but ones that do not know how to even begin.
Yes, I do believe large corporations that are losing market shares to craft breweries could use the Lean Start-up approach to win back some of the market. They could introduce new flavors, seasonal flavors, and also perhaps form new companies underneath theirs. Although boring and simple people such as me love to stick with the same bland type of beer, many will be influenced by their outgoing friends to try something that they just may like and also continue to drink.
-Derek Davies
I looove craft beer as well. Ever since coming to austin I started to taste more types of beer since it's kind of a big thing here. I agree that most people are starting to step away from commercial beer and are starting to look for a more authentic taste.
ReplyDeleteI read a little bit more about Brew Hub and I think it is a great idea! Not only does it promote business opportunity but it also gives consumers a wider range of options to satisfy their beer drinking needs. I think this a great example of a "creative monopoly". Nobody offers what Brew Hub offers. I can picture doing something like a Brew Hub but for another industry... I think that this sort of startups like Brew Hub are exactly what I would like to do in the future. Its making a profit by making your world around you better. Not making a profit by being unethical or by taking advantage over others.
-Pablo Rangel
I never really paid attention to the craft beer scene until my former roommate and his friend started brewing beer in our apartment. The beer was actually pretty good considering it came from a kit. Of all the craft beers I've had, my favorite is Bomb Shell Blonde Ale brewed by South Star Brewing from Conroe, Texas. I found this article really interesting because a few months ago a group of home brewers approached our real estate team saying they wanted to open a brewery and asked us to find them a site. During the process I learned how they grew from brewing beer on a porch to going through the process of starting a beer brewing company. Just like many other brewers, they utilized the lean start up method as well.
ReplyDeleteI think the Brew Hub business model is a really good idea and would do very well here in Austin. In addition, it does allow brewers to utilize the lean start up method, if Brew Hub wasn't available many brewers would have to take the risk and spend thousands on the equipment.With sales of craft beer beginning to outpace the larger beer market, it would be wise for the larger brands to begin utilizing the lean start up method to develop their own craft beer brands.
-Brian Masterson
Awesome Topic! I have been brewing beer for about a year and it's not as hard as it looks! Although starting a brewery can be tough and very very expensive. There are many micro breweries out there and even some nano breweries that essentially brew 5 barrels at a time and serve them in a restaurant just like how Dog Fish head got going.
ReplyDeleteI think that this could absolutely work with other industries. Alcohol is even tougher to do this with since one of the major start up costs is fees you need to be compatible with tabc regulations.
Large corporations are trying to combat the losses they have seen in sales by making beer that target craft beer drinkers. For example Third Shift is a brand of beer that is simply part of Budweiser. It is labeled and branded like a craft beer and placed on the shelf next to craft beers to trick drinkers into grabbing it thinking they are avoiding Bud when they aren't. Tactics like this will likely get worse and worse. I think it will take significant consumer awareness like we have seen in recent years with food.
Awesome post.
- Trent W
Cool post! I can't say I am too familiar with craft beer since I am not much of a drinker. However, I do know it is the primary driver for growth in the beer industry. Many other industries/start ups can follow the craft beer model. Instead of making batches of beer, a startup can make almost any MVP at home to test their particular market especially with the advancement in 3D printing.
ReplyDeleteThe Brew Hub business model is very interesting. I had not heard of it before, but I think it is pretty genius. It will help many home brewers that cannot afford their own equipment to properly scale their business and be able to continuously experiment to take the best possible product to market.
I do believe that large corporations can use the lean start up method to win back market share. They can achieve this through constant innovation. The lean method is not limited to start ups. Many larger corporations would benefit from applying some of the principles.
- Jeran S.
Great blog post! I’m not much of a drinker but most of my family members are obsessed with craft beers. My brother likes Lakefront Brewery’s Fixed Gear Ale. It’s pretty cool how craft brewers and other industries can follow the Lean Startup approach. It’s smart and pretty easy to follow because you’re only making a small batch to start out. I think Brew Hub’s business model is awesome. They found a way to turn something they believe in to a successful business. They’re helping brewers but also helping themselves. I think Brew Hub will help brewers follow the Lean Startup approach and large corporations could definitely use this approach to try and win back some of the market. It’ll be tough because craft beer is what’s happening now but I think the large corporations could benefit in more ways than one from this approach.
ReplyDeleteKim Zapata
I also like craft beer and I think this was a great blog post. Actually, I started trying craft beer here in Austin since back home (Venezuela) there are no craft beer options to try. So, i started trying craft beer here in Austin since it seems that many people like it and the city itself love to try many different types of beer. I think Brew Hub's business model is really amazing because they provide many different options for users to try different craft beers and also provide them with a little background of where and how was created. They are directed to people who drink, like, and love beer, and here in Austin and also all around the U.S. is a big market that can be used for profit. For large beer corporations, I think that the Lean Startup approach could lead to answers when the company is not doing well and also could mean of great opportunities for the big corporation to take action and provide their customers with an improved product or new product that customers themselves liked before and are willing to buy.
ReplyDeleteDavid Arismendy
What an interesting post Catherine. I honestly never looked into or understood the passion involved in craft brewing. Reading your blog and watching a couple of the TED Talks, you suggested, has really given me a greater respect for the people involved in this craft. I watched two of the suggested videos.
ReplyDeleteMy first choice was the story of Chad Henderson. Chad Henderson crafts beer with the NODA Brewing Company. In Chad's TED Talk he expressed the importance of the whole culture tied into craft brewing. The consumers, as well as, the producers really have a passion for craft brewing and they understand the creation and personal styles reflected in each product. I agree with you that, from production to distribution, the craft brewing process follows the Lean Startup Model. Each recipe is tested by the consumer and tweaked to perfection before hitting the market (http://www.youtube.com/watch?v=gwa7vACB0X8). According to Eric Ries, "The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn to pivot or persevere" (The Lean Startup, p. 9). By having such a tight nit community, producers are able to test their products within the craft beer community. By testing each recipe on the consumer, the result gives the producer a better understanding of what consumers want and the craftsman can pivot or persevere.
My second choice was the TED Talk on Sam Calagione. Sam Calagione is the founder of Dogfish Head Brewery. What really captured me about his story and his success was how important history and ancient traditions have inspired his crafted brews. As you mentioned above, Dogfish Head Brewery creates, "off-centered ales for off-centered people." Sam Calagione utilizes old world existing styles and each brew tells a story. The brews created are inspired by the progress of our ancestors and natural ingredients. With the mindset and deep connection to every recipe Sam Calagione and Dogfish Head products are the largest craft brewing company in the Mid Atlantic. Sam Calagione says to, "Create your own path." By not following the status quo, as you stated above, and by informing consumers with the meaning behind every recipe, with a story, Sam Calagione has created a lucrative product and brand (http://www.youtube.com/watch?v=XAvE61JqkQs). According to Eric Ries, "Startup productivity is not about cranking out more widgets or features. It is about aligning our efforts with a business and product that are working to create value and drive growth" (The Lean Startup, p. 150), Sam Calagione has, with no doubt, created value in his brews and as a result Dogfish Head Brewery continues to grow.
To answer your first question: What experience do you have with craft beer? Do you have a favorite brewery/beer?
I would say that I have no experience with craft beer. I rarely drink but this blog has inspired me to support the craft brewing community more versus some homogenous product. In the future, if I decide to have a drink, I will look for Dogfish Head brews.
Interesting post! I would not consider myself a beer connoisseur but i have had tried a few craft beers such as Deep Ellum IPA (based from Dallas) and i have also gone to Bangers Beer Garden here in Austin to try a few different kinds. Austin is a place with a strong craft beer community and there also many local breweries such as Austin Beerworks.
ReplyDeleteI think beer breweries are great business to approach with the lean start-up method because to achieve any type of taste you can just get friends together and allow them to test it until youve reached a desired product. I especially like Brew Hub's approach because it allows brewers with less resources to hone and craft their beers in turn creating a larger market for craft beers. It allows brewers to perfect their beers with minimum waste.
I do think that the larger beer companies will continue to lose their share of the market
because people are becoming more aware as consumers and are starting to prefer less generic options. The popularity of craft beer also seems to clearly be on the rise.
-Alejandro Joya
1. I have had some experience until I came to Austin for college. I went down to 512 brewery, thanks to one of their employees who happened to go to the same crossfit place as I did, where they gave me some of their many types of beers to try. I guess this would be my favorite one!
ReplyDelete2. I think an industry that already follows this model is the phone industry. As you can observe in recent events, companies are now updating their phones almost twice a year. However, when they first started they never imagined what this industry would end up being. When they first came out with the smartphone, it was a very primitive object that would cover only the basic tasks(for what it does now), and has been improving and growing as they gather all the input from customer as possible. Then they showcase their product and start to gather all the new input for the next big improvement.
3. The Brew Hub business model is a great idea to encourage home brewers to showcase their products. They help not only individuals who are interested in getting a buck out of this, but it also helps competition and the industry as a whole. They are bringing in newer and fresher ingredients to beers creating a whole new taste and side to the production side. Besides improving in all theses ways, Brew Hub has found a way to make some revenue in the process, helping everyone out in business.
4. I think they really do have a chance by exactly following the Lean Startup Model. If they create a new division specifically designed to innovate on craft beers, they would be able to bring in some of thee home crafters who are already working on Brew Hub, to come and test out a prestigious company’s, brewing incubator.
Eduardo M
I am a big fan of beer in general. Anytime some one mentions beer I am all ears. I dont have specific love for any certain craft beer because I almost immediately forget the name and order something new. Brew Hub has a good thing going because as you start making higher quality beer in higher quantities you keep upgrading to more expensive equipment. Outsourcing the brewing to another company keeps over head low and will allow these craft beer companies to lower prices and spend more on higher quality ingredients to get the taste they desire. There are definitely a good amount of people who enjoy brewing beer as a hobby and more and more of those people are turning their hobby into an actual business.
ReplyDelete- Louis Mendoza
I am a big fan of beer! I am also kind of new to craft beer because back home we don't have them many of them.
ReplyDeleteThis is really interesting because I never thought of breweries following the lean start approach but I guess it makes sense since when they are first starting out they want their "customers" input to craft the beer to their liking.
The Brew Hub business model is very interesting. I think is pretty cool how other brews can pay to use their facilities, I guess that in a short and medium term this is better for the other brewers. Yes I think this business model will help home brewers to enter the market with the lean start up method because home brewers will need less resources to craft their beer and make beer prototypes that they can make potencial customers try it before its sold somewhere.
David Grijalva
This is a great post. Beer has been crafted through the ages, but it was not until recently that it began to disrupt the global beer market and challenge beer conglomerates. It's always important to test a product out and gain response before launching, and craft beer could serve as a great analogy to explain the method. You don't just hand out beer and enter contests without trying and getting feedback from those around you and receiving expert opinion.
ReplyDeleteMy experience with craft beer has been expanding as I get older. I'm simply not content anymore with the bottom of the barrel beer. My favorite beer would have to either the 512 Wit or Revolver Blood and Honey. I prefer to go to bars with a large beer selection.
Other companies and other industries need to understand that hypothesis need to be validated. Say someone was brewing a beer and believed I believe lavender will taste good brewed with honey. Simply mixing them together does not guarantee the right mix and adjusting proportions (i.e. features) is necessary through testing and receiving feedback.
Brew Hub is a wonderful idea both for drawing in aspiring brewers and for recreational brewers who may not have the equipment to pursue their passion. Brew Hub identified and is capitalizing on the resurgence of a a subset within an industry. The popularity of craft beer is growing, and it appears that this is a fragmented industry unto itself.
In order for large beer companies to gain back ground, they would probably have to open up smaller divisions that offer and specialize craft beer or acquire smaller companies. However, this presents a great challenge. Many consumers have complained that when large beer companies purchase quality the taste is lost. For example I read an article about Heineken. The beer though not small was bought by a large company and once they took it over regular drinkers of the beer complained that it had lost its taste that it was no longer a great beer but a mediocre one. Large companies need to become more creative and ensure that fundamentally they are focused on the integrity of the beer.