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Tuesday, November 28, 2017

Orchestra Taps into Craft Beer Biz Blind Spots

It's no secret that the rapid growth spiral of the past 10 years has created new challenges in the world of craft beer. Once upon a time, it was relatively easy to enter this industry. You didn't have to be great to succeed because there wasn't much competition. Not rocket science.

Brad Windecker
Today, the equation has flipped. The rising brewery count means craft breweries are often competing with each other in a variety of ways. The incursion of big beer, discussed here on many occasions, is squeezing independent craft brewers out of revenue streams that were once robust.

The result of that evolution is that breweries and brewpubs need to be better organized and managed. Places that wing it and hope for the best are going to experience tough sledding. The current scenario demands reliable systems that can help manage all aspects of the enterprise.

Enter Orchestra Software, a Beaverton company that develops software designed for the needs of the craft beer and craft distilling industries. Orchestra, the brainchild of CEO Brad Windecker, was established in 2008 and has more than 300 clients, including many in Oregon. The company has 50-plus employees and is growing rapidly.

Along with a short list of local beer media, I recently attended a portion of Orchestrate 2017, the company's annual user conference. Some 500 attendees descended on Portland to learn more about Orchestra's software and to get a peek at what they have in the development pipeline.

Orchestra's principal driving theme, shared by Windecker in a conversation with beer media, is that breweries are businesses. Seriously. It's hard to believe, but the concept is often lost on brewers. Indeed, I can think of more than a few breweries that operate without any apparent semblance of a business clue.

"The reality is that we've been through a period in which it was very easy to enter the industry and succeed," Windecker says. "Not everyone who did so had good business sense. With growth rates flattening and competition stiffer, it's getting tougher. If you don't have systems to help run your business efficiently, you're at a big disadvantage."

He's right, of course. High growth has created instability. Windecker reckons that perhaps 25 percent of U.S. craft breweries are not professionally managed. With the market tightening, there figures to be a shakeout and a lot of used equipment on the market in coming years as poorly run breweries fall by the wayside. Not a great scenario.

To help, Orchestra has solutions for large and small brewing entities. It's core customer is a growing craft brewery or distillery in the US that is best practice and technology driven. No surprise. Because integrating management software into your business requires some level of interest in best practices and technology.

"We have customers who aren’t growing," says Windecker. "We also have customers in Scotland and elsewhere in the world. And some of our customers aren’t best practice or particularly tech driven. Those folks typically use fewer of our tools than clients who are more fully immersed in technology and best practices."

What Orchestra provides is an all-in-one management solution that helps breweries make the most out of their profit center, which is typically their pub. The majority of their clients are small. Besides running their breweries efficiently, they need support for a broad range of traditional and non-traditional activities (see graphic).

"We’re always asking customers what problems they have that we aren’t solving," Windecker says. "Once we get past the basics, the first thing we hear is retail. The generic systems out there haven't been very good. We’ve been working on addressing that challenge for several years. We're also looking at ways to build social media and related marketing functions into our platform."

A related part of the challenge is meeting the needs of customers who typically have little or no experience with bulky, complex software. Historically, that meant onsite implementation and ongoing training and support. But that's not where the company is headed.

"We have to innovate to work with a generation of brewers and brewery owners who are familiar with mobile apps," says Windecker.  "Many of these people have never seen software like ours. We have to make our platform more user-friendly, and we're doing that by moving to apps that can be run on phones, tablets or computers. We'll do a lot less training in the future."

Up until now, there's been very little out there on how to run the business of a brewery. When Windecker speaks at a PSU accounting course for craft beer, he sees a room full of students yearning to learn more about the business aspects of the industry.

"It's funny," he says."Outside that classroom, it’s hard to learn about the business. There’s a lot of information on the science of making beer and almost nothing on how to actually run a beer-related business. Orchestra is working to provide technology-based solutions that help these folks run their businesses effectively."

If you think about the trajectory of craft beer, Orchestra makes perfect sense. We once had an industry comprised of a relatively small number of boutique businesses loosely competing for customers. Today, we have thousands of breweries competing with one another on many levels. Being good at business is going to be a key to survival in this scenario.

Which means the potential upside for Orchestra Software is huge.

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