The beer industry represented approximately 2 percent of the U.S.’ total gross domestic product (GDP) in 2016, generating more than $350 billion in economic output. For those pouring the pints, however, keeping track of inventory is a surprisingly murky task.
According to Chris Lorkowski, CEO of beer data startup BruVue, that process can mean the U.S.’ 300,000 draft beer-serving locations lose a chunk of their revenue.
“The problem it causes for the average bar owner in the U.S. is, because they have no way to accurately track their keg beer inventory, they lose, on average, $12,000 a year due to beer waste and beer theft,” Lorkowski said.
The average U.S. bar has 15 beers on tap, he said, and not running out means having a good sense of available inventory. When it comes to determining how close a keg is to running dry and whether it’s time to reorder, though, bar staff can’t simply pull off the top and check — not without spoiling the beer, that is.
Instead, “inventory check” often means manually weighting the keg — or, in the experience of BruVue Co-Founder Mike Mitchell at a previous job, entering a bar’s walk-in cooler, lifting one of the 150-pound containers and shaking it to determine how much is left. For a distributor trying to spot-check its accounts’ inventory, the task also can entail driving to each individual location to manually perform these types of assessments.
Imprecise methods like these leave bars, distributors and breweries with unclear data. That, in turn, can lead to bars running out of a popular pour, becoming an impediment to breweries trying to determine a product’s popularity or a marketing campaign’s effectiveness.
Lorkowski believes those problems can be resolved through an Intelligence of Things (IoT)-enabled beer tracking solution — and it’s something on which BruVue is betting. In an interview with PYMNTS, he discussed the inner workings of the company’s service.
It relies on an on-tap sensor system that can measure, in real-time, the amount that gets poured and track how much remains, Lorkowski explained. The sensors are paired with an analytics dashboard for cooler and tap inventory tracking and for updating digital menus. The dashboard can also be accessed by smartphone to help bars, breweries and distributors get real-time pictures of their stock, place more precise orders and improve marketing campaigns.
Data on Tap
It’s not uncommon for many bartenders to order large quantities of draft beer and lose track of how much actually gets sold, he said.
“Draft beer is and always will be a staple for bars,” Lorkowski said. “They buy it in such quantity, though, and they’re serving so much of it, that there’s a lack of awareness of how much beer is being poured down the drain. It seems like an endless flow of beer coming out of that faucet, but in reality, if you’re a bartender and [you] tilt that glass sideways and pour a little foam down the drain, foam is about 30 percent beer. You’re pouring inventory down the drain.”
That’s a problem BruVue is working to resolve through its faucet-based sensors, devices that measure how much beer leaves each keg. Collected analytics information can then be compared with sales data from a point-of-sale (POS) system, giving bars new visibility into their product loss. The system also allows bar owners to calculate profits and loss on each beer, nailing down which brews are helping or hurting their bottom lines and which need reordering.
“Your highest performer may not be the most profitable beer, and your fastest-moving product may not be the most profitable,” Lorkowski noted.
BruVue is currently working to add a reordering feature and automatic ordering capabilities, and it aims to build out others that help bar owners share inventory data with distributors to facilitate ordering conversations.
The Proof Is in the Purchasing
A solution that collects data on how well each brew is selling can be a powerful tool for breweries. Three-tiered distribution system requirements common in the U.S. prevent breweries from selling directly to bars, instead requiring them to sell through distributors. As such, after launching a new product and shipping it to distributors, breweries often face a long wait to find out how well it did.
It can take 30 to 60 days for distributors to send a brew out to accounts, according to Lorkowski, and another 30 to 60 days to receive feedback on how well it performed. That feedback, he added, is often more anecdotal than hard data.
Brewers face the same struggle when they launch new advertising runs for their beers and want to learn whether marketing had any impact. Here, brewers can benefit from a monitoring and data gathering system — like BruVue’s — that tracks pour-level information for each beer type.
BruVue had to understand its clients’ revenue models to design a product that both unblocks revenue flow issues and sells itself in an appealing way. Lorkowski acknowledged that many restaurants and bar owners have slim margins, and it’s a big ask to request a significant down payment on new technology.
To get around that, the startup offers three payment model options — two of which give clients the hardware for free. That includes sensors to attach to each beer tap and Chrome sticks that display information on TVs and sync digital menus to the cloud. Clients pay for the data through a monthly subscription fee.
“If you’re operating a restaurant with tight margins, you can’t afford to spend $6,000 on a system [when] you don’t know if it’ll work or not,” Lorkowski said.
According to the startup’s figures, the average bar loses $50 per faucet per month from unaccounted beer loss. The company charges a monthly data fee of $15 per faucet for a year-long subscription, the hope being that the bar can easily pay that fee from netted savings, and that a small payment per month will be easier to swallow than a larger upfront cost.
As BruVue expands and rolls out new features, it’s looking to get more bars, breweries and distributors to tap into deeper data — and keep the information flowing.