Corina Special Beers: entrepreneurship, pioneering and a strategic look to the future

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Corina Special Beers: entrepreneurship, pioneering and a strategic look to the future

Authors: Helena Costa and Lara Liz Freire

Summary

Corina Cervejas Especiais was founded in Brasília (DF) in 2013. The origin of the company was marked by the desire to undertake three young people who were amateur beer producers and saw in the product a prospect of changing their professional performances, starting to invest in something they really loved to do. In a few years, Corina became a well-known name in the local market, grew, diversified its products and points of sale, changed its operation and underwent transformations from its original business model. To adapt to the needs of the market with the new stage in which the company finds itself, the entrepreneurs were faced with the fact that adjustments will be necessary in the management of some aspects of Corina's management. Thus, in the face of new opportunities that have arisen for entrepreneurs, the case addresses the following questions: What are the main management problems that Corina currently faces? What directions should Corina take from now on, considering the growing competition in its specialty beer market? How can business owners prepare for the future by considering the company's history, purpose, and vision for the future?

(a) Corina: a pioneering brewery and undertaken with purpose

Eduardo and Heitor, managing partners of Corina Cervejas Especiais, received a proposal to establish their business in a new format and in a new point in the city of Brasilia, that is, to expand within a bar and gastronomy concept. This event made them realize the rapid expansion of the company, and to think about everything they have experienced in these 5 years at the head of Corina to be able to make a decision that guides the future of the company and its next steps.

Corina is the result of a dream of three young friends, who were involved with the homemade and amateur production of special beers. Their passion was IPAS, full-bodied beers with a striking flavor and high hop content. The three young people produced at home, tested new combinations that could be unique, combining the best practices of craft beers with flavors that were still unheard of and pioneering in this universe, such as regional flavors from the Cerrado.

As time went by, this hobby It grew stronger and the friends then had the idea of entrepreneurship, and thus, in the future, be able to change their actions as public servants for a new professional challenge linked to their own special beer company. From the beginning, what would become Corina was marked by principles and satisfaction with the work they were getting involved in. They wanted a profitable business in which it would be possible to act according to the purposes that moved them: passion for differentiated beer, autonomy, creativity, and, above all, that their company could express social commitments through relationships with other local businesses, and with the city itself and its residents. By the way, their connection with the business was so affective that the name was given in honor of Eduardo's grandmother, Dona Corina.

Eduardo and Heitor from the beginning were in charge of the business, from the operation to its strategy, idealizing and making feasible what they planned for Corina. They were supported by a third partner with the role of investor, proposing new products and monitoring trends. Eduardo had a background in international relations and experience as a project manager to support the development of small businesses and had held prominent positions in the federal government, which he left to take care of the dream of seeing Corina grow. Together, the partners with important skills for the business, conceived Corina to be a company that would lead them towards personal and professional fulfillment.

As amateur home brewers, who dreamed of making a living from this activity, they started prospecting the market, started attending specific events in the sector and at the Oktoberfest in Blumenal, they were inspired by an itinerant brewery, which would become a model for Corina's first business model.

So, they started an artisanal production, selling on a small scale in an itinerant way in a beer truck , a Kombi adapted for the sale of labels at local events. The idea of this business model was also linked to the effervescence of the Food Trucks in 2013 in Brazil and also in Brasilia. The initial planned idea was to take the Truck for the front of night parties, which did not prove to be a good idea after little testing. They realized that their audience was not at these parties. After all, they were looking for an audience willing to spend more and taste differentiated beers, and who would not prioritize quantity over quality. They then understood that their target audience was more related to families who attended the many daytime events in public spaces in the federal capital, which started to work better for Corina's results. From there arose an aspect that became the company's decision-making style: design a model, put it to the test, remodel it without fear of risk.

With the expansion of the business, the partners decided to create their own brand of craft beers and for this they adopted the "gypsy model", in which they created the recipe, tested it and sent it to the production of an outsourced brewery located in Goiânia (GO). Due to the minimum production of the contracted company being 2,500 liters, it was necessary to change the business to direct sale and for this it was decided to rent a 500 m² shed that was transformed into a brewery. Located in the North Workshop Sector, the brewery called Curral da Corina focuses on the distribution of its own beers, but also includes some from different brands, favoring others of local production. The shed (Annex 1) offers leisure, food (through a partner company), entertainment and can also be rented for events, a new development that surprised the entrepreneurs.

Now, after 5 years of the brand's existence, the specialty beer market becomes much more competitive in the capital and entrepreneurs need to find the best way to prepare for the future.

In Corina's opening year, the number of independent craft breweries in Brazil was less than 200. This market has been changing rapidly, growing year by year. They went from less than 100 companies in 2009 to, in 2018, reaching more than 800 craft breweries in operation in Brazil, according to data from the Ministry of Agriculture (Annex 2). This reveals that the scenario is dynamic and can count on an even greater increase since, according to Sebrae (2017), the approximate initial investment in machinery for a microbrewery that can produce more than 5 thousand liters each month, has an average value of R$ 193 thousand, which can represent a highly attractive venture for new competitors.

(c) Corina and current aspects of business management

To understand Corina and the way its business currently operates, one must understand its products and aspects of its production and distribution, its points of sale, its communication, its positioning, as well as its customers, competitors, pricing, team profile and division of labor, as well as aspects related to innovation in the company.

Corina Products

The company has six flavors of beer that include the Pale Ale and Ipa types with mixtures of traditional fruits from Brazil, one of its main differentials and signatures in the world of Brazilian craft beer. In its catalogue, for example, there are labels such as Fiapo, a mango IPA, and Ripe, Viscous and Bichada that together form the Trilogy We Are All Guava (Annex 3). The company's flagship is Fiapo. In addition to it, the Livre, Leve e Solta, a lighter pilsen, stand out. There is also Conic beer, which values the aspects of the leisure centers of the city of Brasilia. These beers are sold bottled and in draft beer form, a differential of the Corina product that allows it to be fresher and with a more pronounced flavor. Corina's bottles are 600ml and can be purchased separately or in gift boxes with two units. At the Shed it is possible to buy draft beer in glasses of different sizes (300 ml or 500ml) and jugs (1liter).

A differentiated product that Corina offers is the Growler (Annex 4). This is a returnable container that the customer purchases and that can be refilled with the beer he wants, using a technology that allows this filling on time and that Corina makes available. The container can be purchased and has different formats (PET or glass), and is intended to promote sustainability, in addition to customer loyalty, because with this strategy the tendency for customers to recidivism increases, as there is a flow of customers who frequent the Shed to replenish their Growlers.

In addition to its own products, Corina sells other special beers at Galpão, especially from local craft breweries, considered partners, as well as non-alcoholic beverages, drinks and wines. In addition, it sells souvenirs such as cups and t-shirts that bear the Corina brand (Annex 5).

Currently, one cannot think of Corina talking only about products. It is clear that with Galpão, the company became a service provider linked to entertainment, culture and gastronomy. It is open from Friday to Sunday. The demand for space reservations for private events has also been configured as a possible new source of revenue still unexplored by the company. Some customers have sought out the partners so that they can hold their own events, even weddings, on days when the Galpão is closed to the general public.

Communication, brand and market positioning:

The Corina brand is one of the attributes most explored and strengthened by the company. It is possible to observe this in the various means of communication with the customer and also in the product. Each label has an exclusive art, which aims to maintain a connection between each beer and its composition with the visual elements, so that it attracts the attention of potential consumers from the packaging.

Also, the brand refers to a cow, with irreverent promotional pieces that make use of the sense of humor and relaxation that the brand seeks to represent (Annex 6). They seek in their slogan ("Those who can't hold it drink corn"), to clarify the composition of their beer and make clear their differentiation from beers produced on a large scale in the national market, considered to be cheaper, lower quality beers that include ingredients such as corn in their composition. Promotional pieces are created by an advertising agency, which accounts for a high fixed cost for the company today.

A characteristic present in the company's positioning is the appreciation of Brazilian and Brasilian culture, and it is reflected in the communication. The craft beer produced by Corina seeks to enhance the regional character through the use of typical flavors of the cerrado, such as mango and guava. Also regarding its positioning, Corina offers a differentiated product, with high added value, which meets the requirements of special beer tasters looking for novelty and originality. To accompany this strategy, Corina uses a very peculiar communication in which it brings the "Brazilianization" of names, such as "Indian Pale Ale" in "India Pêiu Êiu" and uses its own vocabulary. Also, the terms used in communication and the names of the products are linked to slang or aspects of the city.

According to the entrepreneurs, the best way to promote and contact potential customers is on social networks, especially Instagram, a network in which Corina currently has more than 18,000 followers. The posts tend to bring the cow, its mascot, and highlight the Galpão's programming, which operates from Friday to Sunday as an entertainment point. These posts tend to emphasize a lifestyle more than the product itself, linking it to the experience in the warehouse. In addition, the shed has an inviting environment for both young and family audiences. The company always seeks this identity in its performance, so that customers visit the establishment with their family and leave satisfied with the place.

Local competition

The craft brewery market in Brasília has changed significantly, bringing new competitors to Corina, including Criolina and Hop Capital as local competition.

Hop Capital is a venture that also offers an entertainment space and a bar, as well as its own label beers. Like Corina, the company also has a connection with the local culture, this is evidenced by its slogan 'created as Brasilia, without submitting to the rigidity of conventional standards and styles'. The company has its focus dedicated to modern and contemporary beers, in addition to being a reference in craft brewery. Criolina is also linked to entertainment, with its slogan 'Music, Beer and other cocitas' The place also offers an entertainment space, located in the South Workshop Sector, but more focused on nightlife and the beers are all bottled, not draft beers.

Regionally, Colombina is a representative competitorUnlike the others, it is a beer factory in Goiás, it does not have a space for entertainment, but it has a very strong local cultural appeal just like Corina, its slogan is 'Proud to be Goiás'. Even facing these companies, Corina still has differentials that work as attractions to consumers and help maintain its position in the market.

Points of sale

With monthly revenues of 150 thousand reais, Corina has four means of sale: rental of barrels of craft beer, sale of its own labels at points of sale, the beer truck and also the shed that is currently its largest direct sales channel.

Pricing

Corina uses Markup as a pricing method, which allows the control of the sales price from an indicator/index that is applied to the cost of the product. And for this, the cost of production, input costs, packaging, logistics, among other financial aspects, are taken into account. The company has different markups for each business segment. The markup for distribution is 1.45% and 2.0% in the shed, so, for example, if it cost you R$10.00, Corina sells it at R$15.00. A Fiapo beer arrives for distribution around R$14.00 reais, while in the shed it costs from R$25.00 to R$30.00. In a large wholesaler in the city, Fiapo beer is sold for lower prices, ranging from R$24 to R$27, revealing one of the company's market strategies. Thus, the (gross) contribution margin varies, therefore, from 30% to 50% to cover other administrative, tax and sales expenses.

Innovation

One of the company's innovation goals is to launch two new beers per year, one for external distribution, and the other for sale inside the warehouse. In addition, there is the intention to add the canned marketing option. As craft beer in bottles is not pasteurized, the can comes as an opportunity not only for innovation but also for safety for the company because it allows for safer transport. Other novelties will be the new packaging of Corina products, which will be reviewed soon.

Another point that concerns innovation in the company is the research carried out for the creation of new beers. There is an employee responsible for them, always attentive to trends and the quality of the beer brewed. He performs tests with 50 and 100 liter barrels before finalizing the recipe and then sending it to the outsourced factory to produce in batches. This allows them to make a small-scale product test production, which they take to customers to try and give their opinion, before starting the production itself.

In addition, the company promotes an event for home brewers called Corina Home Brewers Challenge. This project aims to disseminate the local beer culture, promote new talents among brewers and give visibility to sommeliers (professional who takes care of the beverage menu of restaurants and bars) in the city. The contest focuses on non-professional brewers and allows participants to present their creations to the public and experts who judge who should advance to the final. Whoever wins has the chance to launch a beer together with Corina.

Production and logistics distribution:

At Corina, distribution and logistics, which is a well-organized and structured process within the enterprise. Corina is responsible for sending the recipes and demands to the gypsy factory, a specialized company, located in Goiás and visited at least twice a month by Corina's partners for monitoring and production adjustments.

The operation takes place through a weekly routine organized by orders and deliveries. On Monday, the barrels in stock are weighed to find out how much has been consumed, until Tuesday, orders from the points of sale are received from the distributor, called pulse, so that by Wednesday both the distributor's orders and the demands of the company's warehouse and other events are sent to the factory. On Thursday, the product is received, then the quantities are allocated to each sector that demanded, finally, on Friday, the distributor collects the stock, which will be stored at the end of Corina's supply process.

The total stock is divided between what is in the factory's cold room, what is at the distributor and Corina's warehouse, the latter being only managed by Corina. To keep the warehouse's stock under control, when it arrives from the suppliers, each closed barrel is weighed, coded and entered its data into the system. More than that, the inventory is analyzed through the COGS (cost of goods sold), which is the fundamental indicator for them and is calculated every week. Corina's COGS is 43%, which is considered high compared to other companies in the food industry, which usually have this index with values around 35%.

Every Monday, after the weekend sales, each of the open barrels is weighed and its new weight is entered in a spreadsheet, and there, the effective variation that occurred in volume due to sales is accounted for. This procedure is quite exhausting and takes a few hours from one of the partners. Distribution to other points of sale is done through Pulse, a distributor located in Brasília and which has its own cold chamber that allows beers in barrels to be stored and distributed.

Team and division of labor

The partners share the work, in addition to having a very lean support team that suffered cuts throughout 2018. There are currently 5 people, which ended up concentrating more work demands on the two managing partners.

Analyzing the scores given to Corina, 4.9 out of 5 on their social networks (Google and Facebook). It can be concluded that, despite having a very lean team and working with Freelancers , the service is very well evaluated.

(d) Analyzing Corina's history to support a strategic look to the future

The partners have resumed all this path they have already traveled, they have realized mistakes and successes, and how many decisions there are still to be made. However, they are very busy with day-to-day issues and are unable to implement all the improvements they imagine for the company to continue thriving. It was clear to them that Corina has already gone through several phases in her life, which can be summarized in four main ones:

1. Itinerant: with the Truck , the company emerges with the mentality of startup , allowed daily testing, flexibility of points and home production on a small scale;

2. Industrial: production goes from homemade to industrial and gains scale, professionalizing in terms of image, production and distribution;

3. Services and fun: with the move to the Warehouse, Corina expands and assimilates a characteristic of services, entertainment, communication of a lifestyle and closer interaction with its customers. New products, partner food service, demands for events and cultural programming were added;

4. Gastronomic experiences: this is the phase that Corina is starting, with the need to look to the future and design this vision that understands that it is more than a beer supplier, that it is a company that deals with the customer's gastronomic experience in a more complete way.

Eduardo, the partner currently responsible for planning issues, reflects that there are many possible ways to establish oneself within this new vision, for which there is already a need for greater planning. As they try the new beer that is in the testing phase, he thinks: has the company grown and what would be a good path now? Would it be opening a gastrobar? Would it be strengthening partnerships with restaurants in the city? Would it be through other mechanisms to increase proximity to your customers? Would it then be a good idea to accept that proposal for a new point in the city? It was necessary to decide a course for Corina, within her creative purposes, even if she had already gone further than they dreamed.

(e) Questions

1. What are Corina's 3 main differentials that allowed the company to establish itself in the beer market in Brasilia?

2. What are the 3 main challenges that Corina's management currently faces?

3. What directions should Corina take from now on, considering the growing competition in its specialty beer market?

4. How can business owners prepare for the future by considering the company's history, purpose, and vision for the future?

5. Analyze the pros and cons of opening a new point of your own in the city.

6. How does the pandemic influence Corina's decision-making?

Gallery

Thanks

The authors thank the company for its collaboration, especially Eduardo Golin, in sharing information with students, holding lectures at the University and sharing their dreams with us.

This case was written based on information provided by the company, information available in the media and/or based on other references cited. It is not the authors' intention to evaluate or judge the company in question. This text is intended exclusively for academic study and discussion, and its use or reproduction in any other form is prohibited. Copyright infringement will subject the offender to the penalties of Law No. 9,610/1998.