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Forecasting for Success in Your Brewery

The Importance of Modern Analytics for Forecasting Brewery Volume

In the brewing industry, just like in any other business, preparation is key; and having a good forecast is essential to good preparation. But because forecasting can be difficult to complete with rudimentary tools, breweries often forgo this essential task.
Luckily, modern analytics solutions make forecasting a breeze to prepare accurate and speedy forecasts for barrel volume and sales numbers. In this blog post, we'll explore basic forecasting in modern analytics and how breweries can most effectively utilize lower and upper limit information in their forecasts.

Speed and Accuracy: The Two Pillars of Forecasting
Let’s face it, if creating a forecast is too tedious and painful to do, you probably won’t do it, or at least not often enough. And if what you build is not accurate and you don’t trust it enough to drive decisions, then what is the point?

When it comes to volume forecasting, two aspects are vital: speed and accuracy. A modern analytics platform can deliver both by analyzing complex data sets in real-time, thereby enabling a brewery to respond swiftly to market changes.

- Seasonal Trends: Understanding seasonal demands for different types of beers is crucial. A modern analytics system can predict these variations, allowing a brewery to prepare in advance.

 - Resource Allocation: Knowing how many barrels to produce helps in the optimal allocation of resources, from raw materials to manpower.

- Inventory Management: Real-time data analytics can prevent overstocking or understocking situations, thus reducing wastage and maximizing revenue.

- Market Response: Forecasting tools can predict customer response to new releases or changes in existing products, helping breweries adapt quickly.

In this example, we are using a few years of monthly demand volume (both barrel and sales $) and are asking Tableau to forecast volume for the next 12 months with an upper and lower limit on the forecast.

Just a quick glance at the visualization gives us very valuable insights that we can confidently act on:

1. Fruit beer is seasonal in the summer. We should start to ramp down production in Aug and pick up again in late spring.

2. Hazy IPA is declining overall. We should not brew as much as we did last year.

3. Pale Ale has two busy times of the year, summer and winter, and is highest in the winter. We should get ready for this spike in the fall.

4. WC IPA is expected to generally be pretty flat. We should be able to have a consistent production schedule.

Lower and Upper Limits: Navigating the Range of Possibilities
When an analytics platform provides a forecast, it often gives a range, outlining the lower and upper limits of the prediction. Understanding how to navigate these limits is key to smart decision-making.

1. Lower Limit - The Safety Net: The lower limit can be seen as the worst-case scenario forecast. This is the minimum you should prepare for, helping you establish a safety net for your operations. It can be particularly useful for breweries that have limited resources or are concerned with future demand and need to be extra cautious with their production and inventory decisions.

2. Upper Limit - The Growth Target: The upper limit indicates the best-case scenario. This can serve as your ambitious target, guiding you to scale up production and inventory if needed. Just be cautious about overcommitting resources, as reaching the upper limit is not guaranteed.

3. In Between - The Realistic Picture: Most likely, the actual numbers will fall somewhere in between the lower and upper limits. Use this range to find a sweet spot for your operations—enough to meet demand but not so much that you're left with unsold stock.

Going back to our example, we can use these ranges to make some other decisions based on our overall strategy.

Let’s say that our Fruit Beer 1) has a longer shelf life and 2) we are planning a huge marketing campaign for next summer to spike growth. With these two factors in mind, we should prepare for brewing to the upper limit of the forecast range in spring so we can take full advantage of the spike in customer demand with less risk of our beer going stale.

On the other hand, let’s say that we are really nervous about the drop in Hazy IPA demand and we don’t want to overextend our production and get caught with too much inventory. A smart decision would be to brew closer to the lower limit.

In Summary
Modern analytics platforms are not just a 'nice-to-have' but a 'must-have' for breweries looking to compete effectively in today's dynamic market. These tools offer the speed and accuracy needed for effective barrel and sales forecasting. And understanding how to take advantage of these forecasts to drive decision making and strategy can make the difference between a brewery that thrives and one that merely survives.

Here's to forecasting success in your brewery!

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