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BRIC’s and Beer

20 Oct

As Germany’s infamous Oktoberfest winds down to a close, I find it appropriate to reflect on one of my favorite subjects: beer. After water and tea, beer is the third most popular beverage in the world, and one of the oldest prepared beverages – evidence of beer brewing, accidental or not, pre-dates written history by millennia. I find it particularly interesting to think about the challenges modern brewers face in marketing and distributing beer in such a competitive market, especially in some of the world’s largest populations and economies: the BRICs.   

A recent Businessweek article profiled the push by Budweiser, Anheuser-Busch InBev’s flagship brand, into Brazil. Interestingly enough, Brazil is the birthplace of the majority of the parent company’s board, and is the world’s fourth largest beer market by volume.  The annual per capita consumption of beer in South America’s largest country was 47.6 liters, according to Japanese brewer and holding company Kirin; seeing as how per capita consumption for the top 20 most fervent beer drinking markets is at least 59.6 liters, Budweiser and its competitors must be licking their chops at the opportunity to convert more Brasileiros from drinking caipirinhas to drinking cervejas.

In Russia, unsurprisingly, beer takes second place to vodka as the most popular alcoholic drink, and many consumers view beer not as an alcoholic beverage, but rather as a soft drink. Still, Russians consume on average 58.9 liters per capita.  Presently, the market is dominated by domestic brewer Baltika(now owned by Carlsberg), while AB-InBev’s Budweiser controls just 0.5% of the market. Though thirsty Russians may prefer vodka to beer, they still consume enough to make it the world’s third largest beer market, according to Kirin.

The Indian beer market dates back to the early days of the British Empire, when porters and the appropriately named India Pale Ales were exported to the subcontinent. According to the Institute of Alcohol Studies, the number of Indians consuming alcohol has increased from 1 in 300 to 1 in 20; even though alcohol consumption has grown rapidly, as marketers increase their efforts, beer accounts for only 10% of all alcohol consumed. What is the most popular beer in India? Kingfisher – roughly 1 out of every 3 bottles of beer sold in India is this lager, brewed by Bangalore-based United Breweries Group.

China, the world’s largest country by population, is unsurprisingly one of the fastest growing markets for beer in the world. China is already the world’s largest beer market by volume, yet per capita consumption – 22.1 liters – doesn’t even warrant the country a place in Kirin’s ranking of 35 beer-drinking countries.  As Madison Avenue advertisers and their international brethren refine their offerings for the Chinese market, one can imagine that it will only be a matter of time before the Chinese catch up to Western beer drinkers. Will foreign breweries be able to successfully infiltrate the notoriously difficult to navigate economy of China?  Yes, but not organically; CR Snow, a joint venture between SABMiller and China Resources, brews Snow, which eclipsed the domestic beer Tsingtao as the market leader for the first time in 2006.

Tastes vary among cultures and country to country, but there is no denying the investments that the world’s largest breweries are making to court those in the largest developing countries. The American image abroad hasn’t exactly been spotless in recent years, but what about American brands? According to Chris Buggraeve, AB InBev’s Chief Marketing Officer, American values resonate globally, even if American politics don’t. “It [Budweiser] doesn’t stand for America. It stands for deep American values that are extremely relevant worldwide,” he says. Cheers to that.

A (More) Sustainable Grocery Model

31 Mar

Americans love to consume, as you well know, and that means we have become a rather ‘trashy’ nation. We buy and throw away hundreds of millions of dollars worth of “stuff” every year, and only a tiny fraction of it is recycled. I’ll spare you the details, but for whatever reason, it has been embedded in our culture that we must buy and throw away as much as possible.

One of the biggest sources of our trash is the grocery store. Every week, we trek back and forth to our neighborhood grocer to buy boxes of boxes-within-boxes (which, are often individually sealed!), and then put them in our plastic bags to take home. It’s safe to say that only a tiny fraction is recycled- most goes right into the trash. What if you could eliminate 50% of packaging- and therefore consumer trash- at a grocery store?

I was inspired a few months ago when I read about a wine refilling vending machine at supermarkets in France, especially after reading about how energy-intensive the production process is for glass wine bottles. What if you built a grocery store model around the idea that socially-minded consumers would bring their own bags, containers, and bottles and pay by weight and volume?

I was managing a gourmet wine and cheese shop in Washington DC when the city council levied a $.05 bag tax. I was amazed to see how 5 cents changed consumer behavior- customers had no problem forking over $7 for a chocolate bar and $10 for bacon, but a nickel for a bag? That’s an outrage! Literally overnight, I saw consumers shift from relying on us for bags, to them bringing their own bags; the trendier consumers even found some really cool, well-designed reusable bags that could fold up into their pockets. But I digress. The point is, I witnessed consumers not only bringing their own bags, but also subscribing to a “return” system with milk bottles; an up-front deposit was paid for a glass milk bottle, and a discount was applied to each successive bottle when they returned their empties. (This not only encouraged recycling, but also returned trips on the customer’s behalf)

There are many cases where consumers have shown they are willing to bring their own bags, and many where consumers bring their own containers (growler refills, farmers markets, etc). I would imagine that a chain of small, urban-centric grocery stores built around this model would be successful. There is a limit to the foods that you can “de-package”, however, but this business would cater to a crowd that is happy to settle for fewer choices in exchange for the green factor. There would also be a huge local element involved, as produce and flexible producers would be more accommodating; I can’t imagine that General Mills would sell its cereal in bulk with the intention that it would be purchased in volume rather than by individual package, but a local cereal producer, such as Michele’s Granola, might.

You could imagine that the grocery chain, let’s call it GreenGrocer (needs some branding work, I admit), would sell branded shopping bags and containers. The GreenGrocer consumer would arrive at the store with his own bag, filled with GreenGrocer containers that he would then proceed to fill with his groceries. When he checks out, instead of scanning every UPC code, the person at the checkout counter would ring the customer up based on the weight or volume of his groceries.

There are, admittedly, a lot of problems- ‘hurdles’, I should say- with this model. First of all, the range of goods that could be sold by weight and volume is fairly limited, and excludes virtually any processed food product (which actually would be a selling point rather than a hurdle). Second, finding reliable suppliers that can provide the scale demanded by this model would be difficult. Third, the products that best lend themselves to this model are the ones that are the most perishable- fruits and veggies, breads, milk, etc.

I would like to take a closer look at the grocery industry, particularly in and around dense urban centers. Sure rents are high, but with margins between 40-100%, there is a niche that GreenGrocers could cleanly fill: environmentally friendly, locally sourced, sustainable, 100% natural groceries. Did you hear that Mr. Gore? Now accepting investors!

Custom Brews- “Your Name Here” Beer

6 Mar

In and around my neighborhood in Washington DC, there are numerous bars and restaurants that sell their own branded beers: Stoney’s Amber Ale (which is actually Michelob- my taste buds tell me it’s their Amberbock- according to the bartender), Darlington House Ale, and Front Page Ale. Obviously, these businesses don’t have brewing operations in the basement, so they must have contracts with someone to brew their beers. That, or they just put their name on someone else’s beer, which apparently isn’t that big of a deal (ahem, Stoney’s).

Lot’s of start-up craft beer companies that do not have the capital to open full-scale breweries start out by brewing their beer at larger, established breweries. Brooklyn Brewery, who produces my all-time favorite Brooklyn Lager, started this way in 1987; Matt Brewing Company produced Brooklyn Brewery beers for years, and Brooklyn Brewery didn’t even open a working brewery in its namesake neighborhood until eight years later (side note: I highly recommend reading Beer School by the Brooklyn Brewery founders Steve Hindy and Tom Potter. It’s equal parts a corporate history and a lesson in starting a business).

Clearly, there is proof of a contract brewing model for start-ups that need to minimize costs, but what about the contract brewing partnerships with restaurants like the ones in my ‘hood? I’m reminded of the Virginia artisanal coffee Roasters Central Coffee, which offers unique blends, and also the opportunity to create unique blends dictated by its customers (for example, upscale P&C Market in DC’s Capitol Hill neighborhood created the P&C Blend that it serves and sells in the shop). Could that model work for beer?

What if you could get the Darden Restaurant Group as a client, and work with them to create custom beers for each of its many national restaurant chains? You could imagine that a crisp Pilsner-style beer would be ideal for the Italian fare at Olive Garden, and maybe a more complex Lager would compliment the fare of its upscale Capital Grille restaurants. The key would be locking in clients with big chains, so you could brew the custom beers on a large scale. A key question would be whether or not big restaurant groups have exclusive partnerships with distributors that would prevent them from buying from competitors (thoughts on this?).

The “your name here” beer brewing model is pretty interesting, and completely shifts the burden of marketing and branding from the brewery to the client. The brewery would need to hire a very talented brewmaster that would educate and work with potential clients in order to co-develop uniquely tailored beers.

Why stop at restaurants as the sole client base? Trader Joe’s branded beers have shown that there is a market for grocery store branded beers (Josh Noel over at the Chicago Tribune and a panel tried them out and tried to guess what brewery was behind each offering).

All this beer talk has made me thirsty- I wonder what an “Ifyoustartmeup” ale would taste like?

A High-End Native American Restaurant?

12 Feb

Concept

 

 

recipe for success/deliciousness

 

 

Everyone who loves good food and drink has dreamed of opening up a restaurant at some point in his life, right? I’ve tossed around a few ideas myself, but one of my favorites that I keep coming back to is a high-end Native American restaurant.

“What should we do for dinner tonight?”

-“Thai?”

“Nah, had Thai for lunch yesterday. What about Arapaho or Commanche?”

-“Nice! We could try out that new place, prairie, that just opened.”

“Sounds good to me. If it’s too busy we can swing by that Navajo place around the corner”

What better alternative to ‘Modern American’ dining could there be than ‘Pre-Columbian’? Plus, Native American dining would naturally embody everything about the major 21st century food movements- local, sustainable, all-natural. I was intrigued to try out the Museum of the Native American Indian’s cafe, Mitsim, which was innovative for a museum cafeteria (I guess), but still fell short of my vision.

Businesses have been using the idea of the Native American as a marketing ploy to hawk wares for years, but I think a themed restaurant (theme as in food, not as in tacky made-in-china wall teepees and peace pipes) would truly celebrate our country’s real founding fathers- and ideally turn a tidy profit in the process.

There are a lot of ways that this concept could come to life, but I think the most effective would be to go high-end. Given the food that would be served- wild game, seasonal vegetables, etc- customers will already be paying a premium for high-quality ingredients. Additionally, the restaurant could focus on one specific part of the country, or perhaps rotate depending on what ingredients are in season. Obviously, this would require a lot of research into the cuisine of various Indian tribes, but I think the food would be exotic, yet familiar.