Rogue Ales believes that their “Ground to Glass, Grow your Own Revolution” is a key tenet to their success. The company leverages the Internet of Things (IoT) to ensure that their supply chain is able to deliver the highest-quality ingredients to their breweries just in time.
Highlights:
- Consumer desire for freshness and high quality is influencing the beer brewing industry.
- Rogue Ales owns Rogue Farms giving the brewery a unique advantage in being able to produce specialty ingredients.
- The Internet of Things has enabled Rogue to capture and act on the data surrounding their supply chains.
Rogue Ales, headquartered in Newport, OR, is an alcoholic beverage company founded in 1988 that produces beer, wine, cider, and distilled spirits. Their ales have won over 1,800 awards at various brewing competitions.
Rogue’s brewing operation is unique in that the company’s subsidiary, Rogue Farms (founded in 2008), grows all of the ingredients used. The company believes that their “Ground to Glass, Grow your Own Revolution” is a key tenet to their success. Rogue Ales leverages the Internet of Things (IoT) to ensure that their supply chain is able to deliver the highest-quality ingredients to their breweries just in time.
The trend toward freshness
According to AT Kearney, 93% of consumers consider freshness to be the most important criterion when purchasing foods. According to the USDA, the sale of organic foods in the U.S. has more than tripled from approximately $12B in 2005 to over $35B in 2015 (data for 2016-2018 was not immediately available).
Consumer desire for freshness and high quality is influencing the beer brewing industry. According to the American Brewers Association, the number of craft breweries in the United States has increased from 122 in 1973 to over 6,300 in 2017.
As the competition between breweries intensifies, brewers are constantly looking for key ways to differentiate their beers from their competitors in this $111.4B market. Most beer sales are through microbreweries (defined as a brewery producing less than 15,000 barrels per year and at least 75% of beer sold off-site via distributors or wholesalers). Rogue Ales has made freshness a key value-add differentiator for its brand, selling over 325,000 gallons in 2016. In a Market Watch article, Rogue’s president, Brett Joyce, says:
What it means is that we have to get better all the way around. The quality has to go up. Just having products isn’t enough. You better have a strategic plan to go to market, retailer support, good follow-up and good sales people. It’s a real business now.
With the establishment of Rogue Farms in 2008, Rogue began producing their own ingredients, breaking tradition with most breweries, who acquire ingredients from traditional wholesalers. Rogue has a 52-acre hop farm, located approximately two hours from the brewery, where it produces its entire hop supply. Rogue states that:
Growing hops is an expensive and time-consuming endeavor, but it also helps to guarantee our supply and quality while allowing us to keep our Brewmaster, John ‘More Hops’ Maier, happy with unique, aromatic hops.
The control Rogue Ales has over Rogue Farms gives the brewery a unique advantage in being able to produce specialty ingredients for its core and specialty beers. At Rogue Farms, Rogue grows or produces:
- 10 varieties of hops
- Two varieties of malting barley
- Rye
- Pumpkins
- Marionberries
- Jalapeños
- Honey
The challenges of using fresh “wet” hops in beer
A basic beer recipe only has four ingredients: malted barley, water, hops, and yeast. Of these ingredients, hops are the most difficult to source, store, and transport due to their perishability. Most brewers use pelletized, dried, hop pellets. Rogue uses fresh (or “wet”) hops in their ales, harvested from Rogue Farms. Fresh hops give their beer a fresher taste, as the hops’ aromatic qualities are not damaged by drying and pelletization.
Fresh hops, once harvested, must land in a brew vat within 12 hours and cannot be exposed to excessive heat, air, or humidity during transport or their volatile aroma compounds will degrade and produce aromas of “skunk” and “compost”. To ensure the highest quality of hops, Rogue has turned to technology to ensure that its supply chain is delivering the freshest possible hops to the brewery.
Using the Internet of Things to build quality into Rogue’s supply chain
The vertical integration of Rogue Ales and Rogue Farms gives Rogue a unique advantage in being able to leverage new technologies to ensure it sources the highest quality ingredients possible directly from their farm to their brewery. Rogue Ales uses Intel’s Connected Logistics Platform to manage its hops supply chain. Intel’s platform is a logistics management solution that couples Internet of things (IoT) devices with a cloud-based data analytics system. These IoT devices are one-time-use sensor tags that attach to shipments and collect data (e.g. temperature, humidity, location, etc.). This data is sent over a proprietary wireless protocol to a central server where the data is aggregated and analyzed in real time.
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The system tracks shipments and collects data during every facet of the supply chain, ensuring that quality thresholds are maintained and any problems with the shipped goods can be immediately corrected (for example, if one of the trucks runs into traffic, the others can be intelligently rerouted). It is estimated that 30% of all perishable products shipped in the United States become spoiled during their journey from the farm.
After the wet hops are picked, Rogue attaches three trackers to each shipment: at the top, middle, and bottom of the bale of hops. These trackers measure temperature, humidity, and location. Rogue can ensure that the hops have been kept in the proper environment and that they have not spent too much time in transit.
If a shipment does not meet quality standards, it can be discarded before it is used in a beer batch, reducing waste and ensuring that Rogue does not waste its precious brewing capacity brewing beer that will later need to be dumped for quality reasons. The location of the shipment is updated every ten minutes, and once the hops have reached the halfway point, Rogue starts the brewing process. This ensures that the hops arrive just in time and go directly from the truck into the brewing kettle.
The Internet of Things has enabled companies like Rogue to capture and, more importantly, act on the data surrounding their supply chains. Companies are able to make smart decisions that bring cost savings and flow directly to their bottom line.
This article was written by Zachary Richards, an MBA student at the Peter T. Paul College of Business and Economics at the University of New Hampshire. Zach is a Software Engineer at Pegasystems, Inc., where he specializes in back-end Java development, data structures, and agile development practices. He graduated from Worcester Polytechnic Institute in 2016 with a B.S. in Computer Science.
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