Discover the Best Craft Beer Delivered to Your Door: https://www.beer52.com
This case study examines Beer52, a young start-up monthly beer service making strong use of a subscription business model. High innovative, connected and ambitious, Beer52 use co-creation and very human, personal relationships with their consumer to craft an efficient and engaging experience. Let’s start with their manifesto. Young entrepreneur and founder of Beer52, James, believes:
Gone are the days of watery, fizzy, tin cans of nothingness. Craft beer is rebellious, anti-establishment and witty. A good craft beer takes ingenuity and imagination to brew. An army of thousands are tinkering and tweaking. Inventing, discovering and creating. Strong beers, fruity beers, hoppy beers, all for you to discover.
Craft beer has been a passion of James Brown’s since the days his dad used to take him round Europe and the UK on the back of his motorbike, visiting (and of course sampling) microbreweries. This kernel of an idea was given legs at a Design in Action Chiasma event back in April 2013. The aim of this Chiasma was to create new ideas for the food sector, specifically looking at new opportunities for artisan food companies in Scotland.
James went to the Chiasma – held in Elgin, deep in the highlands – thinking that at most, he’d be getting a much-needed break from various projects that were systematically failing. At this point, James had received an Entrepreneurial Spark award and was forging on determinedly, albeit waiting for success. He appreciated the “tough love” approach, noting that before Entrepreneurial Spark, it was hard to get honest feedback. James pitched his idea for Beer52 in the final minutes of the Design in Action Chiasma, and, to his surprise, won £20, 000 in funding, and professional support through the networking capabilities of the Knowledge Hub.
“Beer52 would not exist without that weekend in Elgin.”
His journey began, as so many do, with serious graft. He didn’t take a wage, worked nearly untenable hours, and encountered numerous setbacks – the most notable at the launch of Beer52, through a disastrously successful Groupon offer. Beer52 sold 5000 offers, something James never expected. Although James had bought in stock for that many offers, he didn’t consider that so many would break. The box design changed as soon as possible. At this point, a nearly broken James already showed the respect and consideration of his end-users that would help Beer52 to become so successful by personally answering every single email of complaint.
Beer52’s next step was to raise crowd funding, which they did to the tune of £100 000. The money allowed James to begin to build his team. In the beginning, James was careful to make every penny count. He didn’t take any money from the business for a long time, and compared it to looking after your baby before it can look after you.
Now Beer52 has expanded to a core team of 5 at their office in Edinburgh. Alongside James is Lynn Bremner, Beer52’s knowledgeable operations manager, who previously worked at BrewDog and knows her way around the industry. They also have a content manager, Erin Bottomley, who is in charge of blog posts and editing Beer52’s magazine, Ferment. Having someone whose specific position is to craft and curate engaging social media content is a marker of success for Beer52. In the early days, James felt frustrated at not having the time or resources to do it properly; he recognised the importance of an engaging social presence from day one. “Beer,” James says earnestly, “is a fun thing, and should be fun to talk about!”
Their team is rounded out by Alex in a brand new ‘Customer Experience’ role. Alex found Beer52 as a customer, and James was excited to be able to recruit a staff member who already understood what Beer52 was all about and wanted
to be a part of it. Alex was hired not on the back of his Beer52 adoration, but on his criticisms. He sat down and told them exactly what they could do to make their company better, and they listened.
James notes a previous mistake as hiring staff that perhaps were not as passionate about beer as they could have been – something he has learned from and is careful not to do again. In all his collaborations and professional relationships, he looks to work with people with passion for what they do. Perhaps the best job is held by Zen, Beer52’s ‘Chief Beerhunter’. James is determined that everyone on their fairly new team believes in the vision, and is doing exactly what they want to be doing. Beer52 is also supported by co-founder/investor is Fraser Doherty (also from Superjam), and investor and tech entrepreneur Andrew Bredon, who founded secretescapes.com and helps manage Beer52’s developers.
Beer52’s designers and developers are freelance, and work externally. James has plans to eventually fill nearly all these roles in house, but first needs to raise the capital. Utilising the freelance pool business model, Beer52 advertised on Creative Scotland and received huge response to their most recent post of illustrator.
Beer52 also employs a senior and junior designer, and works with Ben Hopkins (founder of Naked Wines and the Naked Wine Club) as a consultant. Notably, the Naked Wine Club has over 1000 members. This connection means that Beer52 have access to all of Naked Wines’ through inserts in wine boxes, and reciprocate with Naked Wine inserts in Beer52 boxes. They run similar deals with Hotel Chocolat, Firebox and Pact Coffee. This media and advertising is free except for the cost of print.
Beer52 has also managed to snag Davide Cervellin, the current head of analytics at eBay. How did they manage to procure such talent? Simple: he likes beer, so is willing to work evenings and weekends to help Beer52 run an analysis of the lifetime value of their customers. This includes cohort analysis, and a study of which customers come from which channels, and questions of value. They’ve also worked with a third party fulfilment warehouse that employs 6 people on Beer52’s contract alone, simply to pack and fill the boxes. They’ve created at least 12-13 jobs in their first two years and anticipate many more.
Beer52 aims to be a £100 million round business within the next 3-4 years. They’re currently £1.5 million and see their next stage as a round of investment for 2 million, then another round after that. It is worth noting that they got to 1.5 million turnover after having raised 180 000 using crowd funding such as Angel’s Den.
The craft beer market is exploding, enjoying 40% growth year on year. Buying alcohol online is also in its infancy so the whole production is set for massive growth. As it grows, Beer52 will grow and create further jobs for people in Scotland. James is focussed on keeping the core team in Scotland, and is excited not only to create jobs in a warehouse packing boxes, but also highly paid skilled jobs for designers, developers, and other emerging roles.
They also support micro breweries around the world and in the UK, taking the beer these SMEs can only provide to a small area and putting it put it out to the whole of the UK and eventually Europe. Beer52 thus supports other SMEs who will go on to create jobs and pay tax. 80% of the microbreweries Beer52 use as suppliers are British, something that they do not anticipate changing. There are over 1300 different microbreweries currently operating in the UK.
Beer52 are ambitious; they want to have a company that has 150 000 active members. Right now they have 6,500. That 150 000 will be made up of more than just the UK. James sees opportunity for other markets in Europe and even and certain states. He knows that without IP, his plans for growth are time sensitive and rely on him providing not just a functioning subscription beer service, but also the best subscription beer service.
Flexibility and Adaptability
Beer52 is constantly reassessing everything they do, changing and trying to improve. This can be seen in their magazine, Ferment, and the many changes in design, layout and content it has undergone. When they first started, James was intent on keeping costs low and opted for a “cheap and cheerful” courier. Now he has learned (through disasters such as crates of beer chucked over fences and left in wheelie bins) exactly what not to scrimp on. Beer52 has learned that certain frugalities impact negatively on the company. Delivery, for example, is a vital part of their business. If they can’t deliver a box of beer, they don’t have a business. They automated dispatch when they moved to their new warehouse, and moved to a new courier, Royal Mail, for delivery. This is only one example of how they are constantly looking for ways to streamline and improve their business.
Beer52’s business model is subscription. It’s recurrent revenue; they test various channels and how to acquire the right type of customer, and then track how much it cost to acquire that customer. They pay for them once and then there’s a repeat purchase. James considers that the Holy Grail in business: to get that loyalty from customers. He feels very fortunate that their business model is all about that loyalty, as it makes for extremely rewarding business practice. Right now what Beer52 are doing to improve that lifetime value and to make that loyalty solid is improving the service, doing everything they can do to make sure it’s the best experience every month: the best beers, best magazine, best delivery. James recognises that a danger of the subscription business model is that as soon as one of those things goes wrong then the customer thinks, why am I paying for this? James does not take that loyalty for granted; Beer52 positions their loyalty to the customer as a central tenet.