Ex-Tech in Asia editor launches his startup, aims to attract more people with craft beers

L to R: Peter Rothenberg (CEO/founder, Best Beer Japan), Eldad Bribrom (Chief Beer Officer, Best Beer Japan)
Image credit: Best Beer Japan

See the original story in Japanese.

Entrepreneurs are often eccentric, and that may be a kind of honorable title worthy of praise but there must be no one else as unconventional in the world as this guy. Peter Rothenberg graduated UCLA and came to Japan in 2007 to study at International Christian University. In 2014, he founded the English learning service Eigooo! from MOVIDA Japan 5th batch and seems to have focused on service provision but suddenly changed jobs to become a driver of human-powered rickshaw in Asakusa, Tokyo. This was followed by an appointment to Tokyo-based chief editor of Singapore-headquartered startup media outlet Tech in Asia.

It became gradually rare to see Rothenberg’s posts since around last summer. I heard he had been preparing something new at his office in East Ventures in Roppongi, and it is finally unveiled. I, as a writer covering entrepreneurs, would like to say welcome back to him, as he returns to the entrepreneurial field.

Peter Rothenberg founded a craft beer startup Best Beer Japan and raised a total of 15 million yen (about $136,000) in its angel round. 15 venture capitals and individual investors as shown below participated in this round.

  • NOW (the fund launched last month by Kazuma Ieiri )
  • Makoto Takano (CEO / Chief Editor of Forbes Japan, CEO of D4V, CEO of MT Partners)
  • Mamoru Taniya (D4V, CEO of Asuka Asset Management)
  • Jun Ogawa (Director of Teambox, Managing Director of Pixie Dust Technologies)
  • Koji Yamada (CEO of Boundary Spanner)
  • Norihiro Matsudaira (Chief Investment Officer of Hoops Partners)
  • Masashige Obara (CEO of StartPoint)
  • Hiroaki Watatani (CEO of AS-accelerator)
  • Hisamizu Takahashi (Miz Partners)
  • Ken Soga (SG Capital)
  • Yasushi Oga (CEO of Flier)
  • Naoki Yamada (CEO of Anydoor)
  • Kengo Ito (D4V)
  • 2 undisclosed individual investors
Best Beer Japan’s logo
Image credit: Best Beer Japan

Not a few readers of The Bridge love craft beer (and the investors of this round must be craft beer lovers too), but unfortunately the price becomes higher than major brand beer when drinking at bars. There are two reasons for this: craft beer is not on mass-production and the distribution channel is not established. The former one cannot easily be solved due to dependency on consumer demands, but the latter one went beyond my expectations.

With respect to the major brands, beer produced at their breweries is distributed to wholesalers, and then it is supplied to consumers through retailers or liquor stores. We often see a beer barrel connected to a beer server in a bar or restaurant. On the other hand, in the craft beer industry, restaurant users have to put in orders directly to craft beer brewers and receives them directly using low-temperature delivery services (aka cold storage delivery). Unlike the major brand beer, there is no system to collect empty beer barrels by wholesalers so that restaurant users send them back to brewers themselves via delivery services.

Image credit: kjekol / 123RF

As described above, the distribution system of craft beer is quite inefficient. For example, with a glass of craft beer sold by 1,000 to 1,500 yen (about $9.1 to $14) for one pint in restaurant, its cost is about 650 yen (about $5.9) and the distribution cost accounts for 20 to 30% of it. Rothenberg’s aim is this: if the cost is reduced by improving efficiency of distribution, restaurant can provide craft beer at a cheaper price than the current one and that may lead to increased consumer  desire for craft beer. As the demand increases, brewers can increase the production and one of the former reasons for high pricing mentioned above is likely to be solved.

The form of craft beer barrel is not standardized but brewers do not promote its brand with beer barrels. They compete for the quality of their products. Best Beer Japan’s first challenge is to improve the distribution efficacy by sharing beer barrels among brewers. The firm has commenced beer barrel collection services in cooperation with brewers and restaurants which participate in this concept in the Tokyo area. It is in the so-called user validation phase, and Rothenberg said that the main purpose of this phase is to observe whether restaurants’ behavior will change or not by introducing the beer barrel service.

Aims to beer company of 21th century

Recipe image of made-to-order beer
Image credit: Best Beer Japan

Best Beer Japan’s goal is not to be a startup to improve craft beer distribution, although starting with the beer barrel collection service. Leveraging market data and knowledge acquired from this service, the firm eyes a possible future that it provides an E-commerce of craft beer or makes made-to-order beer by itself six months or a year later. The firm can use time for preparing these new services effectively by acquiring licenses of liquor manufacturing and liquor sales business while providing the beer barrel collection service. As Japan’s Raksul succeeded in the printing and delivery service by networking printing factories, Rothenberg expects that the similar model can be realized in the beer industry because not a few existing breweries have surplus production capacity.

Digital tools will also be useful for the craft beer sales. The craft beer lovers form a strong and heavy layer of enthusiasts and the craft beer business basically focuses on repeat users. Although certain marketing efforts and branding strategies will be needed, it can acquire heavy users at very low cost apart from the severe share competition among major brands. In this field, web media players like Beer Girl which was purchased by Cocolable this February exist, and such an online marketing style using story content seems to go well with craft beer too.

In the context of the startup, cooperation with the unmanned convenience store system 600 would be possible. It is well-known that free beer is provided at WeWork’s co-working spaces after working time, so that it is a reasonable culture that craft beer is provided from 600’s refrigerator at startup offices where labor environment is regarded as important. Based on the data-driven sale strategy, the firm can deliver a best-selling craft beer product in an optimum distribution flow.

If Best Beer Japan grasps the brewery, distribution and sales channel, a D2C (direct to consumer) model of craft beer will be completed. The beer industry has a long history so that it is not so easy for existing beer companies to introduce innovative management style. The firm will also focus on the brewing process improvement by digitalizing the recipe in order to create an environment where everyone can drink craft beer in everyday life. The firm’s tag-line ‘To life. To beer. To exploration’ are included in Rothenberg’s tenets.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy