Sometimes it’s good to get out of Beervana. Portland, Oregon is a wonderful city and it has been my home for the past sixteen or so years. I still remember my first visit, when I was interviewing for my job at the University of Portland. My potential new colleagues took me to the old Bridgeport Brewing on NW 14th, and we had fantastic pizza and the most delicious ale this kid from New York had ever tried. I had been all over the world, cooking food and running food & beverage departments in some of the world’s most beautiful places. Yet almost immediately, Portland stood out as special. Peaceful and progressive; old growth with new green; healthy and alive. It was like begin dropped into Tolkien’s “The Shire.” And the beer was fantastic, nearly magical. The flower-blossom aroma and high spirits of that IPA we shared made me feel like we were drinking the sap of a living beer plant; it was like tasting truly fresh food for the first time. Sixteen years later, I remain comfortable in Portland. It is my "happy place." And it’s also a good thing that I get out of town now and then.
Today I am in Florida for a business meeting. When I put on my strategist’s hat, a warning light started blinking in my brain. I think by living in Portland, Beervana, I am being lulled into thinking that the craft movement is unstoppable, and that small independent breweries will most certainly win the day. The data reported by the Brewer’s Association confirms my confidence, my comfort -- and thus the big problem. Warning light! Cognitive bias alert! I had to get out of Portland and see if this comfortable state-of-the-industry well being is really happening elsewhere.
Many months ago, in our CAS Forum, I warned a seasoned production manager that you couldn’t blindly trust data to inform your strategy – you had to get out of your cubicle, turn off the computer, and manually check your operations. In that forum thread, we were focused on production planning, so we spoke of the difference between virtual and actual inventory. I suggested how “look and see” verification to see how far you actual inventories varied from the data being reported on the computer screen was essential to his success. The same issues apply to broader business analysis and strategy. You have to get out of your comfort zone; you have to take a critical look at whether your data are deceiving you. Sometimes you have to go outside and sit on the deck, and look at things from a different perspective to save your company, or your industry.
I decided to see if AB/In-Bev’s strategy, as viewed in the comfort of Portland, surrounded by independent craft breweries and culture, was the same if I analyzed it in Florida. So here I am, in a fancy-ish bar (Deck 84) in Delray Beach, Florida. Lots of beautiful people here sitting on the deck, sipping drinks and watching the Atlantic Blvd Bridge over the Intracoastal Waterway rise for the passing yachts. Aside from the view, Deck 84 is a typical South Florida watering hole. They have standard bar menu food. They have a decent beer menu, mostly bottled, with a few tap handles. They have what seems to most a nice selection of craft beer. I just finished my meeting with a partner of a well-known Angel investing group to discuss mergers, acquisitions and other geeky business stuff. He had a Blue Moon (MillerCoors) served with an orange on the rim of the glass (“brilliant marketing ploy,” he says). I got a Full Sail Cascade IPA. The bottle that came says: “Employee Owned.” This is where I started to get scared…
Of the dozen or so craft beers on the menu, more than half are owned by AB/In-Bev. Then there is Bud Light, Budweiser and that whole assortment. Sitting here, far from Beervana, The AB/In-Bev strategy seemed simple and clear. Own the beer menu. Leverage bargaining power up and down the supply chain. Defend your territory and develop consistent sales routines that make it easy for Deck 84’s beverage manager to make money. AB/In-Bev’s strategy in Florida is to minimize menu (shelf) space for MillerCoors and Heineken brands. When their sales guy comes in, he has an entire portfolio of easy sales: The old standard American lagers, standard nice imported lagers (Stella Artois, Becks), excellent imported ales (Leffe) and a nice handful of fully (Shock Top, Elysian) or partially AB/In-Bev owned American craft beers (Craft Brew Alliance stuff: Widmer, Kona, Omission, etc.). One stop shopping for the beverage manager of Deck 84... Nobody, and I mean nobody, over here in Florida (other than craft brewery owners) knows that Blue Point, Elysian, or Kona are AB/In-Bev investments. And that is just how they want to keep it.