The craft beer industry is booming, with existing breweries growing rapidly, and new ones opening at a rapid pace.
But this growth brings great challenges. From inventory management to purchasing and receiving, and production to quality control, the actual operations side of a brewery is not an easy job.
And is often the case, these kind of challenges open the door to new business opportunities. Brad Windecker saw an opportunity to help these brewery founders, and built OrchestratedBEER, an all-in-one brewery management software solution, to help these brewery founders manage operations and growth so they can concentrate on doing the thing they love to do – make great beer.
Identifying an opportunity
Before founding Orchestra, Brad was an implementation consultant, helping small and mid-sized companies implement ERP (enterprise resource planning) software – a job that requires the consultant to understand everything about a company, from their workflows, to the reports they need, all the way down to the structure of their general ledger.
“ Every time I completed a project, it occurred to me that we should target other similar companies and leverage the expertise we had gained from the implementation process. I especially thought that solution would fit one of Oregon’s favorite industries, Craft Breweries.”
However, the owners of the consulting business didn’t recognize the opportunity. So, when the recession hit in 2008 and his employer was bought out, Brad decided to leave and start Orchestra in Beaverton. The goal was to create an ERP company that focused on specific industries, enabling his team to build in best practices and turn as much of the traditional services component of ERP projects into software that worked out of the box.
This meant the company would need to have a hyper focus on each target industry, learn everything about it, and then work all of that knowledge into the product.
“ We had a relentless focus on understanding what the first customers needed, so we could make sure that we worked all that knowledge into the solution. We looked at every spreadsheet that our customers were using, how they used whiteboards in the brewery, how they used Quickbooks, and studied their workflows. In the early days, there were many revisions of how we suggested people use our software, many versions of reports they needed, and so on. As we gained more customers, we fine tuned all the features and functions into the solution that customers see today.”
Listen to the customer.
It really is a simple concept, but the dedication Brad and his team put towards listening to the customer, and then responding, quickly helped their growth tremendously.
“ It showed our customers and prospects that we were focused on the industry and committed to making the product into the solution they needed. In a small community like craft beer, it was vital that we walk the talk and prove that we were in it for the long term and dedicated to the success of the industry.”
One of the biggest hurdles the Orchestra team encountered early on was the difference in how each brewery handled their TTB (Alcohol and Tobacco Tax and Trade Bureau) reporting process. Every brewery has to file the Brewer’s Report of Operations to the TTB, but every customer in the early days seemed to think about it differently. It took Orchestra almost 2 years to have enough customers to fully understand how to build a solution that handled every customer and all the infinite permutations of how beer moves around a brewery.
“ It’s easy to say you have TTB Reporting, but it’s really hard to get it right 100% of the time for all breweries, which we can now say with confidence.”
Another hurdle the team encountered was that they weren’t replacing a proven system; they were replacing spreadsheets, whiteboards, Quickbooks, and homegrown databases that breweries had all developed themselves to try and keep track of their business. This meant that every customer Orchestra encountered had different systems and processes that had to be replaced.
“ As we were building out our solution, this was hard to deal with. Today, OrchestratedBEER handles it all and we know exactly how to get customers off those legacy tools, but back in 2011, it wasn’t so clear.”
Early Wins and Growth
Oregon is craft beer spoiled (not that any of us are complaining).
Given that there are 200+ breweries located here, it would have made sense for a new Oregon company offering a software solution for the craft beer industry to build its client base in its home state.
But that wasn’t the path that Orchestra traveled. They didn’t target a specific geographic area, but instead targeted the industry.
“ Our first client was Lazy Magnolia Brewing Company in Kiln, Mississippi. Shortly thereafter, we landed Schlafly in St. Louis and Firestone Walker in California. The first customers found us at the Craft Brewers Conference, the big industry trade show for the craft beer industry. When we started exhibiting there, we were one of the few tech companies; we were surrounded by bottling lines, valve manufacturers and malt suppliers. That initial presence in the industry, combined with strong SEO on our website, drove traffic to us. The early success solidified our strategy of using inbound marketing, which we still rely on today.”
But in an industry and community as tightly knit as craft beer, once a solution is being used with good results, word of mouth marketing takes over.
“ Once we had started solving the problems of the first few customers and had established ourselves as a company dedicated to the industry long term, things started to move fast. When you combine a great product that solves a problem, dedication to the industry and the customers’ success, and great marketing, you end up with great word of mouth and high traffic to your website. We also made sure that anyone that was interested in our solution could see everything we had without having to call us and get a custom demo. In other words, we made it as easy as possible for customers to decide that our solution would be a good fit for them.”
One of the main pain points Orchestra is looking to solve is to bring all operations and finance information into one place. Having multiple systems for different areas of the business is what causes most of the challenges in running a growing company, and you simply can’t get the data you need to understand your business when data is in many different systems.
Many businesses rely heavily on web based tools, with Quickbooks and Dropbox folders full of spreadsheets. Bringing all the aspects of the business into one application that has been tailored to the industry solves this problem.
“ More specifically, all breweries, from the smallest startup to the largest craft breweries in the country, have challenges understanding their cost and margins. Orchestrated helps breweries of any size see all the cost components that go into a beer, from the malt to the label on the bottle, and all the labor and overhead involved, to see a true cost. Without having all the financial and logistics information in one place, this is almost impossible, but we’ve made it easy and provided the reporting out of the box to show the data to customers in a brewery specific format.”
Recently, Orchestra has seen the effects of the recent brewery M&A activity with some of their smaller clients merging with larger players. These mergers lead to additional high-end needs like multi-location production, consolidated reporting, and system integration needs.
“ From the brand new breweries being set up from day one to be multi-site conglomerates to the growing mergers and acquisitions space, our solution helps them see a big picture of what’s happening across their sites and brands.”
Evolving the solution for other opportunities
The Orchestra team has seen a rapid user adoption rate within the craft beer vertical, to the tune of 207% sales growth over the past three years. This rapid rise has landed them on the Inc. 5000 fastest growing companies in America list for the second consecutive year.
But the myriad of challenges in the beverage industry are not solely limited to breweries.
“ Yes, manufacturing liquids poses many challenges that are faced by distilleries, brewers, and others. It’s critical that in a complex business like these, finance/accounting is in the same system as inventory, logistics, QC, and production. The main problem we solve is eliminating the silos of information and bringing everything into one application. This allows data to flow between the areas of the business and provides a single source of the truth. This challenge and solution exists in both beer and spirits. Distilleries also deal with the dreaded TTB and have similar reporting demands. Our systems handle all of the needs of a distillery to automate their TTB Reporting.”
Challenge equals opportunity, and for Brad and his team the opportunity was around launching Orchestrated™SPIRITS – an all-in-one business management software solution that helps you manage every aspect of your distillery, from accounting in the back office to production in the still house.
And Orchestra is not stopping there either.
“We’re in the process of working with a number of wineries already on OrchestratedWINE. We hope to launch the product in 2017, and expect it to be our third main vertical. Our goal is to be the #1 provider of ERP software to the beverage manufacturing market globally. We already have brewery customers in Canada, the UK, and Australia, and expect this global expansion to increase in the coming years and accelerate with the introduction of the winery solution.”
Much like they found in the brewery and spirits industries, there are a number of ‘tools’ wineries use for specific areas of the operation, but there is a huge gap in having an industry specific ERP solution that brings everything together.
Keeping up with the rapidly growing industries they serve is a huge opportunity for Orchestra. Craft breweries are opening up at a record pace and the distillery growth is nearly doubling year over year. There are currently 250 of the 4,000+ breweries in the US using OrchestratedBeer, so there is a huge opportunity to engage and work with many more breweries in the US, and around the world.
Brad also feels the craft beer industry is hitting a maturity as opposed to a peak.
“You can recognize this in the consolidation happening, investment capital flowing in, breweries starting out day 1 with 100 BBL systems, etc. These are the signs that the industry is no longer just a free for all; it’s now structured, there’s a lot of money at stake, and the growth potential is huge. When you look at the numbers, craft only makes up 20% of all beer consumed in the US. There’s still a lot of macro beer drinkers out there that will shift to local craft beers in the coming years. It’s very feasible that craft doubles in size over the coming decade and grows to 40% of all beer volume in the US, which would be an astounding volume of craft beer.”
And while craft beer is hitting maturity, craft spirit growth resembles craft beer circa 2008, with the number of companies doubling every year and the potential for acceleration as some of the early craft distilleries proving out you can make a big business in the space.
All this growth and client potential does pose challenges to the Orchestra team.
“ The biggest challenge facing us today is staying focused on our core mission. The old adage “you can drown in a sea of opportunity” is a good one, especially when our solution can help solve so many challenges. Orchestra’s place in all this is growth is to constantly listen to what our customers need, and make sure that we provide them solutions with a great experience. We’re now seen as the gold standard of ERP for the beer and spirits industries, so we have a responsibility to provide the industry best practices, benchmarking, and data analysis that is now needed.”
Creating a company culture that stays true to the core mission and the values of the people in the company is something that Brad and his team really focuses on. The values they have instilled into their business are Customer First, Continuous Improvement, Authenticity, Teamwork, and Integrity.
But creating a strong culture is something that took time, about 5 years, to fine tune and nail down.
“ Our culture also has a lot of standardization; not for the sake of efficiency, but for extreme quality. Like a brewery or distillery that has to standardize their processes to ensure that every batch is high quality and offers the same great experience, we do the same for our people. Every department leader at Orchestra uses the exact same structure to ensure that regardless of what role you are in at Orchestra, your experience of working here is very similar and high quality. For example, every department has daily standups, weekly one-on-ones, monthly reviews, quarterly reviews and annual reviews. For engineers the standup might be scrum and for the consultants it’s the “go-live review”, but in the end, they are all following the same template to ensure that the experience of working at Orchestra is world class. We hire people that live them, and we end up with a culture that can be described as having an obsession with our customers, constant change and improvement, collaboration everywhere, and with really good people that are true to who they are and do the right thing.”
And doing the right thing in a company that focuses on the craft beverage industries means, of course, having good beer on tap in the office and having Friday at 4pm company happy hours.
So what’s currently on tap at Orchestra and the tougher question, what’s Brad’s favorite beer?
“We almost always have a beer from our friends at Buoy Beer in Astoria on tap here, so right now we have Czech Pils. They helped us out in 2015 by providing all the beer for our user conference, and they are active in the tech industry in Oregon, which I appreciate, and they of course have amazing beers. This is like picking a favorite child…I love them all!”