Digitization as an opportunity to increase efficiency in small and medium sized breweries
Market Development
By the end of the 1990s, most national beer markets (with the notable exceptions of China and Germany) were dominated by two or three players, most of whom were national champions who shared more than 80 percent of the market. This dominance, coupled with the high costs associated with long-distance beer trade and persistent national differences in consumer preferences, beers, drinking habits, taxation and regulation, allowed limited integration across national markets. This was reflected in the low concentration of global beer production around the turn of the millennium. The world's top five breweries accounted for only 25 percent of world beer production in 1998.
In recent years, however, there has been a dramatic catching-up process in terms of the global concentration and internationalization of the brewing industry. The top 5 players in the global beer market accounted for almost half of the world's beer production in 2010, and the brewing industry, once an archetype of a "multinational industry" with significant pressure for local production and local-flavored products, is gradually becoming one of " global industry "has become in the enterprise mainly through the introduction of global brands and use of synergies in marketing and sales.
After three comparatively stable years, total sales in 2017 slumped by 2.5 percent year-on-year to 93.5 million hectoliters, as the Federal Statistical Office announced. Unlike in previous years, exports this time could not compensate for the lower beer thirst in Germany. Instead, exports to countries outside the EU and overseas fell sharply by 4.1%. Especially in China, the market should be saturated. While the beer per capita consumption at the beginning of the 1990s was 143 liters, it has steadily dropped to 106 liters. But dropping beer consumption alone is not the only challenge breweries face nowadays.
A new Trend
Craft beer has long been a fixture in the German beer market. At least from the point of view of attention. Not however by volume. According to the latest market research report released by Technavio, the craft beer market in Europe is expected to accelerate at a CAGR of over 9% during the forecast period. The rising number of breweries is one of the key factors triggering the growth of the market. Since it is still rather niche to insignificant. What the various premium brands always pretended and tried to convey via advertising - beer as a cult drink; Beer consumption as a beer treat - Craft beer solves it: the drink is the focus and is not just a companion to the action. The different varieties offer variety to try rather than simplicity to consume. Beer becomes an intellectual or at least intelligent subject of interest.
Overcoming the Challenges
If you want to improve efficiency in your company, you need good cooperation and communication. Breweries face a variety of challenges today. The amount of different varieties is increasing more and more, at the same time the cost competition is increasing in the competitive struggle. The way to make beer production more flexible and cost-effective leads to a continuous digitization of the brewing system - along the entire value chain: from incoming goods to outgoing goods, from the production to the ERP level. Because when all production steps interact optimally and all plant components communicate reliably with each other, flexibility increases and costs are reduced. It is necessary to gather the necessary knowledge of employees and systems. In addition, one has to face the requirements of avoiding failures, defects and quality losses or minimizing their consequences and thus continuously improving processes along the entire value chain. Topics like Planning, Condition Based Monitoring, Quality Management and Predictive Maintenance are very important factors. The availability of digital solutions in the beverage factory therefore holds great potential; all processes and data along the entire value chain can be networked. By intelligently analyzing and linking the data with the knowledge of man and machine, the efficiency of the systems can be significantly increased. This creates real added value. Further improvements of low consumption of filter aids, water and cleaning media or minimizing additional production losses during grade changes are a great opportunity to increase overall effectiveness.
Reference Use Case
Breweries meet that challenge by creating new products to hold existing and gain new customers. In our example we are looking at a family owned brewery with two main products (Kölsch and Pilsener). Individual offerings have been added alongside their main brands; from alcohol free to lemonade-infused beers.
Here some figures, further describing the operation:
Manufacturing Plants: 2
No. of Products: 13
Product Variations: 39 (Formats, Packaging)
Production Volume: ca. 400.000 Hektoliter
In such an operation, flexibility of the equipment and the knowledge of the operators is key. While main products / formats easily run 50%, others might only be running for just a few hours a week. Changing machine setups for the different formats, preparing for the individual label requires fast change-overs. For smooth operation, well planned maintenance needs to be kept in mind in order to ensure overall equipment effectiveness.
In this concrete example the digitally recording of the individual machine states allows the operator to exactly determine bottlenecks and define corrective measures in case of e.g. repeating errors. Digital assisted utility monitoring also enables the operator to get a clear visibility on the total costs of production. As the food and beverage industry requires suitable track&trace solution, digital solutions allow gathering full production reports and proper root cause analysis.
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