Exploring innovation: IBD Masterclass in Pilsen
“Innovation” must be the most overused term in consumer goods industries. Whether it’s merely a slight modification, a variation or an improvement – all are customarily billed as “innovations”. However, linguists insist that innovation is synonymous only with the truly novel. It is therefore best compared with a revolution.
Well aware of the controversy and unafraid to dash some delegates’ expectations, the Institute of Brewing and Distilling (IBD) chose to explore the conditions for innovations at its most recent Masterclass. It was held in the Czech city of Pilsen in May 2018 and was hosted by Pilsner Urquell, today owned by Asahi after purchasing the SABMiller unit from AB-InBev in late 2016. Incidentally, it was in Pilsen where more than 150 years ago a revolutionary new brewing method for pilsner beer was invented.
It was the IBD’s third Masterclass for its continental European members, after Freising/Weihenstephan (2016) and Salzburg (2017), and it attracted over 70 delegates from twelve countries, including the United States.
The three-day event drove home the point that, within the beer and beverage industries, there is no consensus as to what is an innovation. By choosing their presenters carefully, the organisers juxtaposed two different praxes of innovation: the empirical as employed by the corporate brewers (eg “surveys show that consumer demand requires …”) and the older, more artistic, as embraced by craft brewers (eg “this morning over coffee I thought of which beer to brew …”). The two praxes don’t just differ in approach, they also differ in intent. Through innovations corporates try to increase sales and hike profits, whereas for craft brewers they are foremost self-serving – an expression of the brewer’s individuality. As Brooklyn Brewery’s founder Steve Hindy once quipped: “Beer comes first, money later.”
In the corporate world, innovation is a series of routines that do not depend upon the most creative minds. Innovations are the outcome of market research, strategy sessions and focus groups. The liquid is another box to tick along with a name, a label, an ad campaign and marketing. The product has to pass taste panels. It is only part of the brand.
For many craft brewers, on the other hand, innovations follow exploratory searches for new flavours and sensory experiences that require curiosity and creativity. They are done for their own sake and are unencumbered by mundane considerations such as “will people like it?” or “will it sell?” Much like poets, craft brewers celebrate individual imagination and intuition in their enduring quest for the next great beer. If consumers – like readers – are puzzled by the result and cannot get the hang of it, well, they will have to keep on trying. Who said that experimental craft beer – or poetry – had to be easy to grasp and please the crowds?
Admittedly, craft brewers have it easier than Big Brewers. They are not sitting on a portfolio of big established brands with long traditions. These traditions often seem chiselled in stone and come with a warning: “Don’t touch!” Grant McKenzie, Marketing and Innovation Director Asahi Europe, in his presentation provocatively called them “myths” (aka false), for example the conventional wisdom that “nobody without health problems will drink non-alcoholic beer” or “if you change the recipe on a traditional brand you will lose drinkers”. He went on to dismantle every single brewers’ myth.
What I found most interesting were his comments on non-alcohol beers. Once a true innovation when they were launched half a century ago, they have often lived in the shadow because brewers failed to put their hearts into them. In view of changing lifestyles, the demand for non-alcoholic offerings is rising, so much so that the world’s number one brewer recently announced that non-alcohol or low-alcohol beers would constitute 20 percent of its sales volume in 2025 (today slightly over 10 percent).
Asahi may call itself lucky that, via SABMiller, it inherited Birell, the non-alcohol beer, the fermentation process of which was deemed a true innovation when Zürich’s brewery Hürlimann introduced the brand into the market in the 1960s. Due to consolidation in the brewing industry, Birell eventually ended up with Carlsberg while being brewed under licence by others. Luckily, SABMiller saw its potential and in 2009 managed to acquire the rights to the brand and its yeast for the Czech Republic and Slovakia in perpetuity.
Not having to negotiate changes to the brand with Carlsberg proved a boon. Asahi was free to re-position Birell as a “positive choice adult soft drink” – versus a default option for drivers or people with health issues. This decision would not have been taken lightly just because somebody had a flash of genius. We are talking about several hundred thousand hl in volume for the category, after all. Rather, it would have been bolstered by extensive market research, pointing to growth potential for flavoured non-alcohol beverages. All in all, Asahi’s empirical approach to brand extensions should not diminish the impact Birell’s three main variants – traditional bitter, sweet and botanicals – will have in the market. On the contrary.
When it comes to innovations in the beer industry, craft brewers have been at the forefront for several decades. Thanks to their willingness to think outside the box, they have provided consumers with a plethora of new styles. Bretts, sours and other experimental products like beer+wine and beer+cider immediately come to mind. Listening to the presentations by Shaun Hill, the founder of the Hill Farmstead brewery in Vermont, USA, which was rated “best brewery in the world” for four years in a row by ratebeer.com, and Jan Paul, brewmaster at Svaneke Bryghus on Bornholm island, Denmark, I was surprised how confidently they drew an analogy between craft brewing and artistic creation. As if to prove it, they even went so far as to quote lines of poetry.
With the brewer being at the centre, it’s only logical that the stories of “how I did it” attain almost equal importance to the product itself. One of Mr Paul’s beers, which delegates got to taste, had been brewed with linden flowers, which a friend from Moldova had picked back home, put into the boot of his car and driven all the way up to Denmark, while another was brewed with things Mr Paul had found on the ground while foraging in a forest. When I later relayed those stories to Prof. Glen Fox (University of Queensland) and a globally-renowned expert in cereals, he replied this was not innovation but random brewing.
In terms of ingredients Prof. Fox has a point here. But consumers don’t seem to care, as for them a novel and unique-tasting craft beer, whatever it has been brewed with, is in fact a product determined by the brewer’s personality and garnished with a great, unforgettable narrative. It’s the whole package – creator plus story plus product – that constitutes innovation. As such, experimental craft beers of the kind produced by Mr Hill and Mr Paul far exceed a literal understanding of innovation.
Delegates who thought innovations in craft brewing too much hot air would have been relieved to hear Dr Vladimir Nesvadba from the Hop Research Institute in Zatec, Czech Republic, talk about hop breeding. Hiking around Europe and the Caucasus in search of wild hops, equipped with only a pair of secateurs and directed by locals to the best sites, his approach seemed far more down to earth and work-like in comparison. As he said, finding the wild hops was only the beginning. Before he can claim to have bred viable new hops, he will need to engage in extensive breeding programmes. Alas, not all new varieties will turn out perfect for brewing.
The same blood, sweat and tears approach to innovation probably produced Ziemann’s new mash filtration plant, called Nessie, whose benefits Stefan Riggert, Ziemann’s Sales Director explained. Only after a lot of toil and trouble would Ziemann’s engineers have converted a lightbulb moment into a tangible technical solution, which has filters arranged like a cascade – hence the name Nessie – so that the mash is separated into wort and spent grains in a continuous process.
Thanks to its many takes on the topic, the Masterclass highlighted that innovation can mean many things to many people and that there is no single process to follow. It was the beer writer Conrad Seidl who gave delegates even more food for thoughts. Talking about future innovations in brewing, he expressed his belief that they will revolve around malt and, above all, various yeasts.
He also predicted that craft brewers will be at an advantage when it comes to launching new products in quick succession. Thanks to the internet – the major global innovation in recent times – small craft brewers will be able to market and sell unique products globally and will not be limited to a small local customer base. That’s provided the product enjoys a high reputation.
Hark his words.
