By Sam Holloway, Ph.D. and Mark Meckler, Ph.D. - Crafting A Strategy
One of our goals to better serve our members at CAS has been to “go vertical” and understand everything about the craft beer industry. By deeply understanding this important and complex industry, we can help ensure the survival and healthy growth of the craft beer industry. Sometimes, by looking in other places and at other industries, we see a gap in our own understanding. A recent trip to a local home brewing supply store spawned just such a discovery and made us aware that we can do more to help support the next generation of great breweries.
Who Are The People And Organizations That Seed The Craft Beer Industry?
In Portland, Oregon if we like fixing and building things ourselves at home, we go to a local hardware store for the supplies we need. The good ones have experts that know where everything is, and can tell us what we need and even give excellent advice on how to get things done. The hardware store employees are a wealth of knowledge for the home repair enthusiast. This is similar to the role and relationship between the home brewer and the local home brewing supply store. The home brewing/distilling/fermenting supply retailers typically do a fantastic job of teaching, coaching, selling, motivating and creating community for the home/private craft-brewing enthusiast. While we were at Bader Beer and Wine Supply in Vancouver, WA, (a fantastic place) we realized: these are the people and the organizations that seed the entire industry.
A Knowledge And Support Gap In The Craft Beer Supply Chain
We believe the mentoring relationship between home brewers/fermenters/distillers and the homebrew supply shops and owners needs to be reflected in the craft beer industry supply chain. Where are these shops, guides and relationships for fledgling craft breweries and the brave former home brewers that have decided to “go pro”? We can follow our local hardware store example in the construction industry to look for a blueprint for success.
Like the craft beer industry, the construction industry is a highly fragmented industry populated by a few global firms, a few large national firms, a handful of regional firms and mostly thousands of small local firms that specialize in the various trades and crafts. The large construction companies buy supplies differently than small and emerging companies. Large construction companies know what they need, rely less on mentoring, and focus on price, volume, inventory management, and market forces to dictate how and when to make purchasing decisions. Large construction companies do not shop at Ace hardware anymore. And what about the small independent contractors that dominate the industry? They also do not shop at an Ace hardware anymore, but the construction industry has a mature supply chain, that adequately fills in the knowledge gap…
Because construction is a mature industry, the supply chain has figured out how to deal with fragmentation and what is needed for each type of business. Once a contractor decides to “Go Pro,” they have a slightly different, more professional hardware store to fill their needs – more volume and lower prices than a typical neighborhood store, but still small enough to provide personal service, mentoring, and relationship building. The craft brewing industry should learn from construction – we should also offer entrepreneurs transitioning from hobbyist to professional a one-stop shop for supplies and advice. In Portland, Oregon a typical, small contractor shops at specialty retailers like Parr Lumber. They can have a credit account, and they typically get a “contractor” discount so that they pay closer to wholesale than a homeowner would pay as a walk in. A place like Parr lumber is in between a small, neighborhood hardware store and a big box retailer like Home Depot. The primary difference is the knowledge and mentoring that Parr lumber provides above and beyond what a big box retailer can save on pricing. Businesses like Parr Lumber bridge the gap between DIY enthusiasts and the large professional contractor who orders directly from lumberyards, steel manufacturers, roofing suppliers, concrete manufacturers and so forth. This is where small businesses may source almost all of supplies they need, all under one roof, and gain valuable advice from experts. Often, the relationships grow so strong that when a contractor grows large, they still buy from Parr Lumber even if it costs them a bit more.
The Business Opportunity
Since home brew supply shops play such a crucial mentoring role in getting breweries started, perhaps our industry needs other suppliers to continue this mentoring role after a brewery launches. The Brewer’s Association does a good job on the fermentation science side of things, but business wisdom is lacking. We started CRAFTINGASTRATEGY.COM to fill this gap and serve this need. But we can’t do it alone; so we are always looking for industry partners that understand the knowledge gaps that exist and want to help. We believe we have found another one in the GrainCorp family of companies. It is clear to us that they really want to help the industry, from bottom to top. One of the GrainCorp companies, BrewcraftUSA approached us with a simple but powerful proposal: “How can we, as a company, better serve the craft brewing industry? What can we do together with CRAFTINGASTRATEGY.COM?”
Much like that home brew supply shop owner that coaches, motivates, and creates community at a local level; mentoring and sharing knowledge needs to occur at the industry level. The bad news is that there is no “Parr Lumber” equivalent in the craft brewing/fermenting/distilling industry. Once you go pro, you leave the comfortable home brew supply shop and move to separate bulk suppliers, and typically less nurturing relationships. The good news is that by putting knowledge and mentoring ahead of sales – doing what is good for the industry first –companies like BrewcraftUSA are making a concerted effort to fill the existing knowledge and mentoring gap in our industry supply chain. We all know there is more that can be done. That is why we’ve partnered with BrewcraftUSA for the 2015 National Homebrewer’s Conference (NHC). Come by their booth, the CAS team will be there.
We would both like to listen to your ideas about the kind of support you need, and we would both like to help you learn how to run a successful beer business.