Benchmarking Manufacturing Performance
We were asked by a global “top ten” brewer to identify opportunities to improve operational effectiveness, ensure better utilization of assets and reduce manufacturing costs at their 16 plants. We benchmarked their internal key performance indicators (KPIs) against our own index of global best practices.
New Craft Brewery
First Key was consulted for a new craft brewery from the drawing board up to final completion. We began with a detailed business plan, and once funding and approval were secured, First Key built a brand and sales strategy for the brewery. This included defining the brand, logo creation, package design, development of marketing and advertising campaigns, brand execution strategy, creating sales management systems and targeted customer lists, staff sales training, and developing customer relationship management (CRM) systems. At the same time, we organized the technical aspects of the brewery itself, including site building and engineering, equipment selection and procurement, product development and analysis, and complete installation and commissioning of all related equipment. We also developed a series of processes and procedures for the brewery to manage quality control, equipment maintenance, and record keeping.
Facility Master Plans for Top 10 Brewer
First Key developed 10-year Facility Master Plans with a focus on enhancing the client’s brewing, packaging, utilities, manufacturing systems and warehouse capabilities to best-in-class through an incremental capital investment program. We reviewed existing facilities and the client’s 10-year volume and sales forecasts, as well as current operational procedures and unit operations to identify current and potential bottlenecks. The final report included commentary on current operations vs. best-in-class, requirements to achieve best-in-class over a 10-year period, site layouts for each stage of modernization / expansion, and cost estimates for recommended actions.
Distribution Modeling Study
First Key undertook a distribution modeling study to evaluate shifting production of beer products from an existing network of breweries to another network of breweries in different locations. A distribution model was developed that assigned beer production to each source location; as well as the shipment volume to each customer from the assigned source location. This provided the relative difference in freight costs (based on rate and distance from the source to the customer assignment) between the present shipping/sourcing pattern and the future state pattern. By modeling different scenarios, an optimal sourcing model for the future state breweries was provided. First Key delivered a report along with a series of tables and maps, that summarized the assumptions, described the model and the results of each run, and presented conclusions and recommendations.
Technical Due Diligence for a Major Craft Brewery Acquisition
First Key performed a high-level technical due diligence assessment on a top-50 craft brewer on behalf of a global private equity firm. The due diligence project involved an on-site assessment, interviews and questionnaires with key brewery personnel that validated current brewery capacity, identified bottlenecks, evaluated the equipment and facility, assessed the company’s quality management system and estimated market value of the existing equipment. The project also developed recommendations and guidelines for future capacity expansion. The resulting report provided the private equity firm with reasonable evidence to proceed with a go or no-go decision on the acquisition.
Viability Study for a Brewpub
The study involved commercial, technical and business plan components. The commercial review covered market opportunities to determine scale of operation, external market possibilities and extent of support for the brewpub. In the technical assessment we identified licensing, local health department, and environmental stewardship requirements as well as the design for incoming product storage, production facilities and end of process storage requirements. This included ancillary facility requirements for offices and quality control labs. This resulted in a room list with requirements for steam service, floor drains, special ventilation, special floor and wall finishes as well as staffing requirements and an implementation strategy. All the commercial and technical information was pulled together in a pro forma business plan indicating initial capital outlay, life cycle investment, operating costs and return on investment projected over a five year period.
Assessment of European Brewery Investment
First Key provided an independent assessment of the brewery’s business and operations from the perspective of a strategic buyer. The report needed to address several strategic issues considered highly sensitive by the brewery’s founders. We were given one month to complete a wide range of deliverables including a plant inspection, capacity assessment, capital expenditure plan, management and IT assessment, divisional valuation. We were also asked to draw up a business plan and financial forecast assessment, an analysis of branding issues and an overall SWOT assessment from a strategic buyer perspective. First Key assigned several consultants with varying backgrounds to thoroughly address all the key areas reviewed and delivered its report on time and on budget. The client requested our assistance in preparing a summary PowerPoint presentation that was successfully delivered to the brewery’s Board of Directors.
Quality Improvement Program for Association of 30 Breweries
First Key developed a quality improvement program that included sensory evaluation (taste panel), lab analysis and an on-site process / operational review. A scorecard of taste / lab / process results vs. best practice was produced with recommendations developed jointly by each brewery and First Key. After initial implementation, there was a second sensory evaluation and lab analysis to benchmark the improvements against the first scorecard results.
Independent Valuation Opinion
On behalf of a minority shareholder, First Key provided an objective assessment of the fair market value of their interest in the brewery for comparison to the Company’s offer price. The assignment was structured into two phases. The first phase included a critique of the Company’s valuation analysis to determine whether any deficiencies or limitations might have resulted in a material undervaluation of the shares. The second phase included a comprehensive valuation analysis and formal opinion prepared with the knowledge that our report may have to be defended in a court of law if legal proceedings were to commence. Because of our involvement, the client received share redemption proceeds in excess of 50% more than the original offer price.
New Craft Brewery
We consulted on all elements leading towards the launch of a new brewery. On the commercial side, First Key led the development of the brand strategy; corporate identity, public relations and on-site strategies; developed a comprehensive sales strategy; and created a multi-platform digital media strategy. On the technical side we developed the site plan; production, packaging, supporting and utility equipment selection, procurement, installation and commissioning; development of product portfolio and analysis of beers; and, development of operations management systems.
Malt Strategy for Major Brewing Company
First Key developed a malt strategy for a regional brewer with operations in 9 countries. The project involved the review of alternative procurement strategy models, recommendations and the preparation for discussions with suppliers. Included was a review of the existing operations, preparation of audit documents and templates, site inspection and technical reports on existing facilities. The overall work-flow included group working sessions, draft reports, presentation and discussion of draft reports, and final report with recommendations and implementation assistance.
Highly Innovative New Product Development
First Key was instrumental in the development of a highly innovative new beer style. When the client’s test batches were not performing as anticipated, we re-evaluated the client’s recipes and identified workarounds, while still maintaining the original vision for the new product. Test batches for the updated recipe were a success, procedures and ingredients were defined, and the client has since decided to move forward with the new recipe.
Market Analysis for New Craft Brewery
First Key conducted an extensive market study for a client based in the U.S. Northeast. The study included pre-analysis of the national and state beer markets, including size, dynamics, trends, channels, package mix, per capita consumption, pricing, distribution, seasonality, demographics, employment and ethnicity. During the study, First Key visited numerous retail and on-premise accounts, conducted distributor interviews and gathered extensive data related to the competitive set, consumer pricing and unique local market dynamics. We then used this information to develop a comprehensive business plan recommending strategies related to product, branding, channel, promotion, distribution, packaging and pricing. In addition, detailed volume projections and marketing and sales budgets were developed.
First Key performed a visual inspection of the ammonia refrigeration system, reviewed drawings and commented on code and safety issues, condition of refrigeration equipment, and immediate requirements, short term and long term requirements. We completed an energy audit of the refrigeration system and provided recommendations for energy efficiency improvements including energy savings and payback analysis of improvements. We also provided a review of operational procedures, operator training and organization with recommendations on operations improvements and worked with staff to review and update maintenance procedures.
Business Plan and Feasibility Study
A successful brewpub operator planning to build a new microbrewery and expand into the retail packaged beer market called on us to draw up a business plan, an expansion strategy and feasibility study to be presented to potential investors. This included development of a preliminary plant layout, capital cost estimates, volume, pricing and costing estimates all of which were incorporated into a detailed financial model. The project required significant research and analysis of industry trends and competition as well as consultation with multiple internal and external parties including the local government authorities, trade associations and industry participants. Client staff and hired consultants were also utilized to “pull critical information together,” synthesize data and present consolidated results in a cohesive and persuasive report under tight deadlines.
Micro Brewery Technical/Operations Assessment
First Key conducted a 4-day on-site review of the micro-brewery and provided the business owners with a detailed report and “road map” for improving process management, quality, and operating systems and procedures. Comment was provided on condition of process equipment, the immediate improvement requirements; short term and long term requirements for expansion; and quality control improvements. We developed an outline of general quality control, upgrade and expansion steps in order to modernize and/or increase the plant capacity and improve quality control — with the objective to enhance productivity and efficiency at each step.
Audit of Malting Facilities and Operations
The objective of the audit was to assess four plants on two levels, to maintain them in a functional state to achieve a best practice standard for malt production. First Key reported on each plant covering all parts of the process and key equipment including the capital budgets required to maintain the plants at current levels and the options for development of the sites.
Commercial Development Strategy for New Craft Brewery
Building on market research, First Key conducted strategic planning sessions with the client to develop nearly every aspect of the commercial plan for a new craft brewery. Areas of focus included brand development, corporate identity and alignment, creative development, execution strategy, public relations, the on-site customer experience, sales management, sales territory and retail account development, digital media strategy, human resources (including creation of the HR manual), staff training and the launch plan. We also assisted in the development and execution of these elements over a period of two years.
Market Entry Strategy Study
We helped develop a market entry strategy study for a client looking to enter the beer market in an overseas country. First Key conducted a detailed analysis of the country’s policies, regulations, and standards for imported beer, and examined the beer market seasonality, segments, and historical sales information by region. A detailed analysis of the distribution system, and access to the distribution system was included. We delivered a comprehensive report including a recommended strategy identifying a focused step-by-step plan of action.
First Key conducted phase 1 environmental audits at 3 breweries that ranged in capacity from 0.75 to 1.5 million hL/yr. Work consisted of visiting each brewery, discussions with local engineering staff coupled with a visual inspection of the facility and surrounding property and a review of all existing environmental permits, agreements and waste disposal agreements against local, district and federal regulations. The audit and ensuing report on each of the three facilities met or exceeded the ASTM Guidelines for conducting a phase 1 environmental site assessment audit.
First Key provided a comprehensive written report that involved the inspection of current systems and operational and maintenance procedures. The audit included recommendations for energy efficiencies and operational improvements, updated maintenance procedures, cost estimates and estimated playback for improvements along with operator training.
Quality Management System (QMS)
A Quality Management System review was produced for a large multi-plant brewing company in Eastern Europe. The two-stage assignment initially required a prerequisite review of existing brand liquids acceptance in the marketplace, coupled with process / recipe alterations (liquid portfolio management). The second stage focused on the development of a comprehensive QMS for managing and controlling product quality. The QMS included detailed technical manuals containing specifications, recipes, analytical methods, reporting systems, benchmark performance measures, and an audit program.
Strategic Malt Study for Major Malt Supplier
A comprehensive strategic analysis of the malt supply chain in three major global regions was conducted for a major malt supplier. The analysis included consumption trends, malt trade flows, players and malt capacities, planned expansions, and expected malt supply / demand balance in key end markets. The study included a detailed evaluation of investment considerations including operating and construction costs, production challenges and trade trends, as well as an analysis of the procurement practices of major brewing groups.
By benchmarking the client’s product and services purchasing against best-in-class and identifying cost gaps, First Key was able to come up with a new purchasing strategy and action plan that Identified potential savings for the client in excess of $1.5 million from annual direct material spend and $2.7 million from annual indirect spend.
Industry Advisor to Governments
First Key consults to various government authorities with respect to antitrust/competition, regulation and policy, and other industry related matters.
Independent Project Assessment for Major Investment Bank
The overall objective of the assignment was to provide the Bank with a critical assessment of the company’s proposed investment plan, its effectiveness and compatibility with existing operations/infrastructure, and the company’s ability to implement its development plan in a cost-effective and timely manner. First Key provided an expert opinion to the Bank by critically assessing the technical risks and opportunities presented by the proposed investment; gave recommendations to mitigate risks and successfully implement the investment plan; confirmed the capital expansion project was well planned with realistic cost and time budgets; and assessed the ability of the existing management to carry out the investment plan in the expected time frame and costs while managing risks.
New Craft Brewery
First Key produced a comprehensive business plan with a market, technical and financial assessments for a new craft brewery. The assessment included arranging tours in craft breweries for stakeholder reference; defining product portfolio, packaging ratios, distribution practices and potential sales volumes; brewery design and layout, equipment requirements, technical requirements, projected production variables and annual production capacities; capital requirements, break-even point, payback period, key performance indicators and industry benchmarks.
Based on brewery need, First Key selected all equipment required for a start-up brewery, including all production, packaging, supporting and utility equipment. We prepared the technical and performance specifications, managed the bidding process, selected vendors, and negotiated, reviewed and finalized all purchase agreements. For the major brewery equipment (brewhouse, fermenters, bright beer and packaging), a lead vendor was selected by analyzing each competitive bid. First Key then worked along with the client to highlight and focus on the strengths of the lead vendor’s technical offer, in an effort to further tailor their solution to match the client’s specific needs. Through this value engineering exercise, and additional commercial negotiation, our client realized a savings of 33% versus the selected vendor’s original quote.
Network Optimization Tool
First Key developed a network flow model with over 1500 variables and delivered a comprehensive “modeling tool” for optimizing beer production volumes and product mix with optimal alignment of beer supply between breweries and company owned restaurants. The optimization tool determined the lowest delivered cost to each location and the total cost of ownership of beer produced at each brewery.
The project included recommending equipment suppliers, acquire supporting equipment and supplies, acquire brewing materials, organize lab and lab equipment, formulate beer recipes, brewing trials and beer development with beer samples, startup and commissioning of brewery equipment in conjunction with equipment suppliers and local trades, hire and train staff brewer, educate and train staff about beers, prepare quality control standards and procedures (manual), and the development of a brewery maintenance management system.
First Key was instrumental in the relocation of a 1 million hL/yr facility from the United Kingdom to China. We were appointed as the agent to sell the brewery and then engaged as project and construction managers for de-commissioning, crating, and shipping the plant for re-installation in China. First Key delivered the project on budget and on time to the seller’s complete satisfaction.
First Key was tasked with the job to improve productivity and cost efficiencies for a 1.2 million hL/yr operation involving a complex mix of bottle, can, PET and keg sizes for beer, soft drinks and malt, This involved an evaluation of current line layouts, capacities, operations, and material handling. We delivered detailed recommendations for high efficiency layouts, increased line utilizations, changeovers, maintenance, palletizing, maximizing production time and manpower reduction – leading to improved efficiencies and a significant reduction in the overall cost of operation.
Investment Evaluation Study
The assignment required an assessment of the political and economic environment and distribution channels in the country for a 10 million hL/yr brewing company. It also entailed a complete marketing, technical, operations and financial due diligence on the acquisition company. First Key delivered a “complete picture” report on the investment opportunity including recommendations for streamlining promotional spending and re-focusing the brand portfolio, financial proformas, required technical up-grades, and overall joint-venture observations.
Refrigeration Audit and Recommendations Study
A Latin American client with 4 breweries ranging in sizes from 3.5 million to 6 million hL/yr called upon First Key to conduct a refrigeration audit and to come up with recommendations. The client required a visual inspection of each plant, comments on safety issues, equipment condition, operation, maintenance and staff training and, recommendations for improvements with associated costs and investment returns. First Key delivered a comprehensive report detailing the mechanical integrity of existing equipment, identification of technological improvements (energy saving options), and operational review of organization and training issues.
Business Plan for Launching a New Contract Craft Brand
The project comprised of an assessment of the opportunity with pricing and cost models, capital requirements, product and packaging specifications, potential co-packers, forecasts and margins. Included was the development of a distribution model and negotiate and draft a production co-pack agreement that identified the responsibilities of both parties (including but not limited to production volumes , order process and lead time, quality, shrinkage tolerances, price, payment terms, etc.)
Brand Acquisition and/or Licensing Strategy Study
The assignment included an assessment of the acquisition environment with strategic marketing and operational consideration for the fit with our client’s business in order to increase volume for a client operating significantly below capacity. First Key held confidential discussions with brand owners, and delivered a “short-list” of available brands to consider identifying their strengths, weakness, opportunities and threats.
Brewery Investment Study
First Key produced a special investment study on behalf of an international investment fund looking to invest in an existing brewing operation competing in the Russian beer market. The assignment required an assessment of the current performance and future prospects for the Russian beer market and its major competitors; a capex/capacity review/audit of 2 existing plants and one plant acquisition target for the brewery in question; and an assessment of their market growth plans/strategies including the brand portfolio, pricing, sales, and management. We provided a team of 2 specialists in marketing strategy and facilities/brewing for the assignment and delivered a fully integrated report evaluating the investment opportunity and identifying key issues.
Investment Study for a Malt Plant in Asia
First Key evaluated a proposed investment strategy for a malt plant in Asia. The study included analysis of the country’s beer market & the malt supply/demand balance; general considerations on investment in the country; and usual terms for contractual relationships and mode of relationships. First Key reviewed the business case and made comments on opportunities and risks identified and provided recommendations in view of mitigating these risks.
The assignment included layout plans for 6 million hL/yr and conceptual study, master plan, preliminary and detailed process design and contract development for the initial 2 million hL/yr greenfield installation. First Key delivered design for automated process areas including combi-cellar, yeast room, bright beer cellar, CIP and filter room areas as well as commissioning assistance for start-up and the preparation of operating descriptions and instrumentation design.
A number of First Key consultants have served as expert witnesses on a variety of industry related cases in North America, Europe and Asia.
Operations Assessment and Improvement Plan
First Key successfully produced a detailed operations assessment and improvement plan for a 1 million hL/yr brewery. The assignment included an assessment of the physical plant, manufacturing cost structure, organization structure, financial analysis and projections, operations benchmarking, and identification of opportunities for improvement. The technical review covered the brewing process, packaging operations, materials handling, and utilities. We delivered a comprehensive and detailed report identifying over 60 recommendations for improvement ranked by their impact on quality, cost, and capacity with a priority recommendation for each.
First Key has a solid track record for providing independent assessments and opinions for asset valuations, acquisition targets, capital budgets, marketing strategy, company performance and other industry related issues. Clients have included major brewing companies, investment partners, financial institutions, development funds and entrepreneurial groups.
Other Examples Include:
- Brewery Asset Evaluation (former Soviet Union)
- Marketing Audit including evaluation of overall strategy, brand portfolio and rationalization analysis for a major international brewer (Asia)
- Logistics Planning for major brewer (Latin America)
- Benchmarking of operations for brewers (North America / Australia / Latin America)
- Brand and Facilities Rationalization Strategy for major brewer (Russia)
- Strategic Consulting on acquisitions, alliances and licensing agreements (Europe, Asia, North and South America)
- Due Diligence for major acquisition (USA)
- Set-Up of Brewing School – The Advanced Brewery Training and Research Institute (China)
- Technical Partner providing quality and performance audits / technical troubleshooting for brew-pub chain with 23 locations (USA)