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2017 Master Brewers Conference
5. Small and efficient—Crafting a world-class performance culture

Kristopher Scholl, Craft Brew Alliance, Portland, OR, U.S.A.

World Class Manufacturing
Thursday, October 12
9:45–11:00 a.m.
Imperial Salon B

Continuous change, complexity, and increasing competition is the new reality for the craft beer industry. With 5,300+ breweries in the United States, the competitive landscape continues to intensify. Over the past several years, the amount of brewery capacity has nearly doubled and the industry is only filling about half of that capacity. As craft industry growth slows, filling capacity will increasingly become a challenge, especially for those that are leveraged. Economic principles would suggest that in order to achieve an efficient capacity utilization with slowing-to-static craft industry growth, beer pricing levels will be pressured lower. This is all in the face of rising raw material, labor, utility, and supply costs. Additionally, we have seen larger breweries acquire craft breweries, allowing those craft breweries to leverage the larger brewery's scale and efficiencies. These industry dynamics will certainly continue to put pressures on gross margins and profitability and could potentially be even more troublesome for those who must fulfill their debt obligations from recent start-up or capacity expansions. In an increasingly crowded marketplace, standing out from competition purely based on beer taste, quality, or style differentiation is becoming more difficult. Consumers today have more choice and access to various styles and flavors of beer than at any point in U.S. history. The craft industry has matured and the overall quality of craft beer in the marketplace is overwhelmingly good. Additionally, brewers typically buy raw materials and equipment from the same suppliers, so differentiation based on brewing process and ingredients is difficult at best. So how are craft breweries to compete in our new competitive reality? As it becomes more difficult to differentiate on the "what," more and more focus needs to turn to "how." As craft brewers, are we burdened by being small and forced to find ways to market our "inefficiencies" as something to be celebrated? Or can we be small and efficient? Implementing a performance management culture will improve consistency, quality, efficiency, and profitability. Craft breweries that embrace and apply the principles of world-class manufacturing to their operation will have a competitive advantage over those that hang onto the ideology that being small and inefficient is something to be celebrated. In the end, consumers have many choices and the competition is only growing. Trying to differentiate based on better marketing and better beer is in reality doing what every other craft brewery is trying to do. This presentation will make the provocation that breweries that embrace a culture of performance management and continuous improvement will achieve a sustainable competitive advantage. A roadmap on how to implement a performance management routine, empower employees, and practical applications will be explored.

Kristopher Scholl is the senior director of operations and engineering for the Craft Brew Alliance. Mr. Scholl leads the company’s brewery operation and engineering teams and has championed CBA’s "world-class craft" performance culture. Mr. Scholl has been with CBA since January 2015 and is based in Portland, Oregon. Prior to his role at CBA, Mr. Scholl was responsible for brewery operations at Deschutes Brewery in Bend, Oregon, where he pursued his passion for craft beer after an 18-year career with Anheuser-Busch InBev. Prior to departing AB InBev, Mr. Scholl was the global director of brewing and quality with responsibilities for Latin America and China. Prior to the global role, he was the director of planning and performance management for North America with performance oversight for all Anheuser-Busch InBev North American operations. During his tenure at AB, he held various brewery operations positions, from brewing group manager, to brewmaster, to senior general manager. Mr. Scholl graduated with a B.S. degree in chemical engineering and minor in economics from the Missouri University of Science & Technology. He completed the Master Brewers Program at UC Davis in 2001. In 2008, he received his MBA from Syracuse University’s Whitman School of Management. Mr. Scholl lives in West Linn, Oregon, with his wife Kenesia and daughter Jacqueline. They enjoy hiking, exploring the Northwest and spending time, and great beer, with friends and family.

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