- Changing the Brewing Industry with Big Data [Book Excerpt] - March 16, 2017
The following is an excerpt from “Vaporized: Solid Strategies for Success in a Dematerialized World” (LifeTree Media, 2015) by Robert Tercek:
Apart from the addition of stainless steel brewing vats, the process of brewing beer hasn’t changed much in the past 1,000 years. And yet Steve Hershberger, a technology entrepreneur who built systems for tracking industrial manufacturing and distribution, uncovered an opportunity in the beverage industry for SteadyServ. As a hobby, Hershberger once invested in a microbrewery based in his hometown of Indianapolis, Ind. From the outset, he applied the tech-geek discipline of measuring everything: borrowing from his experience in Silicon Valley, Hershberger developed a set of key performance indicators (KPIs) for the brewery to track every measurable aspect of the brewing process.
As the fledgling brewery began to win awards and prosper, Steve shifted his attention to the distribution business. He wanted to learn about the data systems used by the beer distributors and their customers. He was mildly stunned to realize that there were no such systems in the entire beverage industry. Zilch. Zip. Nada. What Steve learned about the beverage business was shocking to an infotech geek.
How does a bartender know how much beer is left in a keg? He lifts the metal canister by one edge, swirls the contents inside, and makes his best wild-ass guess. Sometimes the bartender guesses right and sometimes he is wrong: if he’s wrong, the bar will run out of a popular brew on a busy night. Unhappy patrons won’t stick around for another round. Multiplied across the 500,000 bars in the United States, this rudimentary technique leads to billions of dollars of lost income.
How does a beverage company find out which beers customers are ordering? Today it sends college students equipped with clipboards and pencils to ask patrons in bars. It’s hard to imagine a less reliable source of information for a mature $100 billion industry than the alcohol-saturated memories of a partying crowd after happy hour.
The beverage and hospitality industries lacked a system for tracking the consumption of draft beer in real time. To Hershberger, this was a golden opportunity to apply everything he knew about information technology to the ancient brewing business. In 2012, he started a new company called SteadyServ.
To solve the data problem in the beverage industry, SteadyServ created a product called iKeg that consists of a metal ring loaded with sensors and a wireless transmitter. The ring is attached to the bottom of a keg of beer and provides a steady stream of information based on the weight and pressure changes. The information is relayed wirelessly to SteadyServ’s cloud, where it is converted into usable structured data. This information is then streamed to specialized mobile apps designed to optimize decision-making all the way through the brewing value chain:
- SteadyServ’s mobile apps enable a bartender to keep track of all of the inventory in-house and order fresh beer with a single touch on the screen.
- Another app alerts the distributor automatically when a keg is nearly empty, thereby ensuring that a replacement will be on the delivery truck.
- The app for bar owners enables the proprietor to monitor the sales — by the glass, in real time — of every keg of beer in-house.
- A single integrated data feed in the app allows bar owners who manage several establishments to manage them all remotely, so they can compare the performance of one bar against another.
- More broadly, the aggregate data generated across all participating bars in a given city or region can provide beverage marketers and distributors with useful insight into breaking trends in different regions, even neighborhoods.
Ultimately, brewers will be able to use the data generated by SteadyServ to test and fine-tune marketing campaigns and promotions and to improve their product lineup.
The SteadyServ story is a microcosm of the Big Data trend that is sweeping across every mature manufacturing business in the world. Entrepreneurs in every field are using connected sensors to discover and analyze new fields of information, converting it from random data smog into useable insight to drive old-school manufacturing and distribution companies to greater efficiency.
With SteadyServ, Steve Hershberger developed a new technological tool to collect data that allowed him to run his business more efficiently. This isn’t the only way that a traditional business can develop a proprietary data asset. In some cases, no invention is necessary: the data that can transform your business and give you a critical competitive edge in the Vaporized Economy might already be in your pocket. But you need to figure out how to unlock it and utilize it before your competitors do it first.
“Vaporized: Solid Strategies for Success in a Dematerialized World” is available now via fine booksellers and at StartupNation.com.