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WeissBeerger Serving Up Profits One Pint at a Time

by Manju Bansal | insiderPROFILES

April 1, 2013

When startup WeissBeerger discovered that brewers were operating in virtual darkness when it came to consumption-related trends about their products, the company designed a cloud-based dashboard tool to deliver these insights. But the ability to measure beer and liquor consumption in real time and then analyze this information is a tall order. So to make this tool a reality, WeissBeerger turned to SAP HANA.
 

As consumers, we’ve been trained to find savings in many ways. Flying somewhere? We consider the red-eye. Want to watch a movie? We go to that bargain matinee. Need a rental car? We know that those weekend deals are probably our best bet.

The pricing technique that led to these dynamic pricing scenarios is called yield or revenue management. It was pioneered by the global airline industry to understand and influence consumer behavior to maximize profits from a given resource. Now, the notion of dynamic pricing has spread to other business areas and not only applies to airline tickets or hotel bookings, but also  to the most basic consumer products, such as microwaves, jewelry, and clothing.

Omer Agiv, Founder and CEO of Israeli startup WeissBeerger — a company that created a series of beverage monitoring systems for the beer and soft drink industries — noticed this trend. He believed it was time to extend the idea of yield management to the global alcohol and beverage industry, and turned to SAP HANA and his favorite beverage: beer.

Distilling Insights for the Beer Industry

The beer industry is a vast global entity with estimated revenues of about $500 billion in 2013. It also has all the characteristics that make it a good test candidate for implementing yield management techniques:

  • Consumption has flattened out between 2006 and 2011, with growth at 2.5%.1
  • The largest brewers are consolidating. The combined market share of the top four brewers grew from 22% by volume in 1998 to nearly 50% in 2010. These top brewers pocket approximately two-thirds of combined global revenues.2
  • Beer remains a price sensitive category. Diageo, a large spirits and beer company, for example, has had to rethink its entire supply chain when introducing lower-priced but quality beers in emerging markets to reach consumers who drank homemade brews instead of branded beer.3
  • The cost of launching new national brands remains formidable. Anheuser Busch, for example, launched a new brand in 2013 with a Super Bowl ad that cost about $3.8 million for a 30-second spot. The total marketing support for launching new brands is unknown, but estimated to be in the tens of millions.
       
 
 
Omer Agiv
Founder and CEO
WeissBeerger

 

Agiv and his team of passionate beer lovers at WeissBeerger also discovered that brewers were operating in virtual darkness when it came to true consumption-related insight about their products. Brand owners have historically invested a lot of money in more traditional market research, but they lacked the vital “last-mile” analytical information that is essential to the continued success of sales promotions and marketing campaigns.

To provide these insights to brewers, WeissBeerger developed Alcohol Analytics, a cloud-based dashboard tool that presents real-time consumption statistics to brewers. These statistics are measured using flow sensors that fit onto draught beer taps and individual liquor bottles at bars or pubs. This real-time consumption information is reported back to brewers to help them discover the immediate impact of sampling campaigns or television commercials on consumers, as well as trends and correlations that could help them better understand consumer behavior every hour of every day.

But the ability to measure beer and liquor consumption in real time, report this information back to brewers, and analyze the results is a tall order and involves processing and managing a large amount of data. That’s why, to make its Alcohol Analytics tool a reality, WeissBeerger turned to SAP HANA.

WeissBeerger participated in the SAP Startup Focus program,4 which launched in 2012 (see the “Supporting Startup Innovation” sidebar for more information). The program supports startups in developing new applications on SAP HANA, the in-memory database and computing platform that allows companies to perform analytics in real time on very large datasets.

Because WeissBeerger powers Alcohol Analytics with SAP HANA technology that crunches large amounts of information in real time, breweries now have more insight into customer trends and consumption patterns.


Enjoying the Results of Alcohol Analytics

Already, Alcohol Analytics is demonstrably helping brewers succeed. For example, a European brewery used Alcohol Analytics to discover that 70% of its beer is consumed between 8pm and 10pm in urban settings versus about 30% in suburbs. With this real-time data, the company was better equipped to test out dynamic pricing and discounting, which was not possible before.

WeissBeerger’s Alcohol Analytics tool, powered by SAP HANA, not only helped participating breweries get smart about maximizing their profits, but also helps them to:  

  1. Discover and fix anomalies such as “generous bartender syndrome”: In a typical bar environment, 20% of draught beer pours are inaccurate. Once bars could measure and monitor draught beer pours, a bar owner could easily identify the source and magnitude of the problem and take simple corrective actions to address it.
  2. Test out new business models: Having flow sensors on every tap has helped bars introduce a new, “self-pour” business model that didn’t exist before. This model involves allowing customers to self-pour from any tap, in any amount, using a magnetic card, and then billing them based on total consumption. As consumers moved from the fixed-price-for-a-fixed-quantity model (for example, about $5 for a pint of lager), they would often try all kinds of beers in varying amounts; overall consumption increased by 30% — an impressive percentage for an industry that has been struggling to raise profitability.
  3. Track consumption trends: Continuously recording the tap’s beer volume enables breweries to track trends and consumer behavior in real time during a given hour/day/week without having to audit it manually using market research firms or focus groups.
  4. Set dynamic pricing: Using Alcohol Analytics, breweries can make focused sales promotion and provide different incentives or discounts on beer that was poured on premise to encourage sales. For example: a brewery could provide a 20% refund for every liter poured between 6pm and 8pm from its beer taps.

Concocting Future Growth

The SAP Startup Focus program provides startup companies with access to SAP HANA developer tools, an engaged community, and the support they need to make their business ideas a reality. For WeissBeerger, SAP HANA was what the company needed to power the Alcohol Analytics tool that is now its flagship product. And this is only the beginning of WeissBeerger’s continuing path to success.

Though the company was founded in 2010, WeissBeerger has upended an entire industry. There is much growth that lies ahead — from expanding to additional markets, to winning new brewery customers, to moving into allied categories like fountain drinks.

Learn more about WeissBeerger and Alcohol Analytics at weissbeerger.com or saphana.com/community/learn/startups/marketplace/weissbeerger.

For more about the SAP Startup Focus program, visit saphana.com/community/learn/startups.   

         
Manju
     

Manju Bansal is Senior Director and Global Program Lead for the SAP HANA for Humanity program, which aims to use the power of SAP HANA to help solve some of the world’s most pressing problems. He can be reached at manju.bansal@sap.com or via Twitter: @BansalManju.

         
         

1 The Wall Street Journal, “Teaching an Old Beer Brand New Tricks” (December 2012). [back]

2 The Economist, “Sell Foam Like Soap” (May 2011). [back]

3 Business Today, “Bottoms Up: How Diageo Developed a Safe, Cheap Beer to Win Over Kenyan Market” (November 2012). [back]

4 To learn more about the SAP Startup Focus program, read “Pairing the Power of SAP HANA with the Innovative Agility of a Startup” and “The Story of a Startup: The Drivers Behind the SAP Startup Focus Program” in the April-June 2013 issue of SAPinsider. [back]

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