- Michael Potts
- 2 February 2024
Running a successful brewery in 2024: The power of the RBV
Running a brewery in 2024 is tough. Over 2% of UK breweries closed their doors in 2023 and with a reported 500 pubs also calling it a day, the climate could be painted as a bleak one. Truth be told, it’s never been easy. It’s been almost ten years since I took over my local brewery from the brink of liquidation. It was a difficult period for its previous owner and a steep learning curve for me. The challenges then mirrors what many breweries face today:
- A shrinking on-trade market
- An influx of competitors
- The need for new product development (NPD)
- A lack of capital for investment
- Increasingly gated routes to market
These are the same hurdles I hear about from brewery owners every week. They’re all battling external factors beyond their control, striving for consistent revenue in an unpredictable market. So, how do you create consistency when running a brewery? By leaning into the things you can control, whilst using the tools already at our disposal.
I’m constantly surprised by how many producers overlook introspection in their quest for ‘owned’ routes to market – a key component in finding the reliable competitive advantage and subsequent revenue streams so desperately needed.
This brings me to a fundamental marketing theory: the resource-based view (RBV).
So, what is a Resource-Based View (RBV)?
At the heart of RBV is a straightforward but powerful idea: look within your business to find your competitive edge and build consistent revenue. This approach, emerging in the 1980s and 1990s, suggests that the true sources of advantage lie in a company’s unique resources and capabilities.
To some, this might be a familiar concept, but this article is for those who, in the daily grind, rarely get the chance to step back and see the forest for the trees. This is your opportunity to strategically plan how you are going to make the most of what you have, not only utilising your existing resources but also possibly turning them into unique selling points for your business.
RBV: Understanding your assets.
There are two types of RBV assets:
Intangible Assets: These include non-physical assets such as brand reputation, location, team/ capabilities, trademarks, and intellectual property. They are harder to build and not easily purchased, making them crucial for sustained competitive advantage.
Tangible Assets: These are your physical resources like buildings, equipment, and capital. While essential, they are often easily replicable and hence offer limited long-term competitive advantage.
RBV is based on two critical ideas:
Heterogeneity: Every company possesses a unique set of resources and capabilities, enabling them to employ distinct strategies and outperform competitors in their own way.
Tangible Assets: These are your physical resources like buildings, equipment, and capital. While essential, they are often easily replicable and hence offer limited long-term competitive advantage.
2024 is the year of diversification, so let’s look at how you can diversify your offering by taking a Resource Based View approach to your brewery.A little bit of context here, so you know you can trust the advice I’m giving you. In 2016, a pivotal moment arrived for me and a couple of good friends. We took a bold step and purchased our local brewery out of liquidation. This wasn’t just a business venture; it was a passion project with a steep learning curve. From a modest £220k turnover, we propelled the brewery to £2.4m annual turnover in just four years. We achieved this with minimal investment and, initially, without even owning a brewing kit – a story for another time.
Entering a saturated market meant we couldn’t rely on traditional approaches. Our first step was a comprehensive analysis of the brewery’s existing assets and potential. We identified our key intangible assets that would form the cornerstone of our strategy:
2. Team of passionate and creative designers.
3. A director with great local influence in the town of the brewery
With these assets in mind, our strategy took shape. We concentrated on cultivating the hyper-local market, investing in community initiatives and infrastructure that resonated with our core audience (leveraging our Director’s local relationships). Leveraging our creative design team’s skillset was pivotal, we developed a range of tertiary and white-label products, expanding our reach within the on-trade market Additionally, this allowed us to integrate a distribution and wholesale arm to our business model. Before we knew it we were the exclusive composite supplier for over 20% of our customers. The resource based view was working and it was showing in our revenue figures!
Each step of this journey was an exercise in leveraging what we had, turning existing resources into powerful tools for growth and differentiation. This experience forms the basis of the insights I share with you today – insights that I believe can transform how you view and operate your brewery.
Let’s build your RBV
To leverage the RBV strategy in your brewery, start by identifying and analysing your unique resources. Use the template below to jot down your answers. The likelihood is you’ll have a great deal of knowledge about your competitors (local and national) and this should help you when you ask yourself the question, “what do we do differently or better than them?”.
Resources: Manufacturing process
Questions: How can your brewery space be used beyond beer production?
Example: You have capacity in your FVs and you use a brand extension outside of beer to fill capacity. kombucha is now recognised as one of the fastest-growing drinks categories in the UK and is fermented. Sound familiar? Explore your existing routes to market with a new, non competitive commodity to trade.
Resources: Personnel
Resources: The brewery space
Questions: How can your brewery space be used beyond beer production? Are there unique aspects of your space that could attract visitors or events?
Example: You’re based in a rural location or have a contemporary, industrial setting. These are both thematic and lend themselves to the growth in unconventional weddings’ amongst millennials and Gen Z. Nowadays, more and more couples are choosing venues that reflect their personalities and interests. Brewery anyone?
Now what? Turning your insights into revenue
After mapping out your resources, it’s crucial to transform these insights into actionable strategies. Begin by matching your resources with market opportunities, identifying where they align with customer needs or fill market gaps.
Then, implement the operational actions needed to make this a defined product/service that you can sell. Once you’ve built your SOPs, it’s about effectively marketing these unique selling points, highlighting what distinguishes your brewery and why it stands out to customers.
Finally, implement small-scale pilots of these strategies, closely monitor their success, and continuously refine them based on defined performance metrics. This iterative process of testing and refining will help ensure the effectiveness of your new strategies.
The final view
In the ever-evolving world of brewery business, 2024 continues to challenge us with its unique market dynamics. The journey from struggling with market saturation to discovering untapped potential within our breweries teaches us a crucial lesson: our greatest assets often lie within.
The ‘Resource-Based View’ isn’t just a theoretical model; it’s a practical, actionable approach that can transform the way we see our breweries and our market. It encourages us to look at what we already have, rather than pining for something our of reach.
As I’veseen first hand from my time as a brewery owner (as well as watching countless others in the industry), when we align our unique resources with market opportunities, we unlock new avenues for growth and differentiation. It’s about more than just surviving in a tough market; it’s about thriving.
The future of the brewery business may be challenging, but it’s also ripe with opportunities for those willing to think creatively and act strategically. Your next big breakthrough might just be waiting to be discovered within the walls of your brewery.