By Eric Peterson | Jul 27, 2019
San Francisco, California
Smart beer taps
While studying civil engineering in New York, Algül moonlighted as a bartender. "I realized the issues in the draft beer industry," he says of the experience.
Originally from Istanbul, Algül developed a business plan for self-serve technology for draft beer. "You get pre-paid cards from the bar and you get your own draft beer," he says.
Pubinno sold the technology to Istanbul-based Efes Beverage Group and moved on to R&D for its next initiative.
"We realized that there were other problems in the industry," says Algül. "You cannot drink the same beer in two different bars. Sometimes you get warm beer, sometimes you get flat beer, sometimes you get a metallic taste, et cetera."
Climate is to blame in some cases ("The beach clubs get big froth," notes Algül), while difference in draft systems can also cause issues. And each style has its own distinct characteristics when it's on tap. "Every beer type has different flow behavior," says Algül, noting that research has shown excess foam contributes to about 20 percent loss per keg.
The issues led to the vision for the Pubinno Smart Tap. Says Algül: "We decided to solve these two issues: waste and inconsistency of taste."
In 2016, the company's headquarters moved to California to join the Alchemist Accelerator in San Francisco. That's where artificial intelligence (AI) entered the picture. Since every bar is different, Pubinno developed a tap that would literally learn from the bartenders, thanks to a dynamic algorithm the company developed.
"We are combining three technologies: the Internet of Things, AI, and robotics," says Algül. Pubinno's cloud-connected taps collect data from users (bartenders) and adjust the flow speed accordingly with a patented robotic mechanism.
The end result? "It pours the perfect beer," he says, with the ideal foam and temperature.
Manufacturing in China and Europe with contract partners, Pubinno took the tap to market in Europe in spring 2019.
"The hardest part for startups is mass manufacturing," says Algül, noting that about 80 percent of startups fail when they have to scale production. Pubinno took a different path: "Our contract manufacturer [Karel] invested in us."
Algül says the geography of the launch was because the European beer industry model allows breweries and beer brands to provide bars with Pubinno's product, while the U.S. model does not.
Pubinno has sold about 1,000 taps to beer brands in Europe and the Middle East, which then deploy them at key outlets. When Pubinno targets the U.S. in 2020, it will market directly to bars and breweries for use in their taprooms.
Pricing is negotiated on a case-by-case basis, but the baseline is a $500 annual subscription per tap. That includes data that Algül says is 93 percent accurate in predicting future beer sales.
Algül says that the company's stakeholders are bars, beer suppliers, and consumers. "We connect all of them and create value for all of them," he says.
Challenges: "HR," says Algül. "For startups, the most important thing is people." The company currently has employees in San Francisco and Europe with plans to grow in 2020.
Opportunities: Algül notes that beer is the world's third most-popular beverage, after water and tea. With taps deployed in the Netherlands, Mexico, Israel, Turkey, and Qatar, Pubinno is launching in the U.S. next. "In 2020, our plan is to scale up in the U.S," says Algül, citing California and Oregon as the first targets. "The U.S. is second in the world after China in terms of [beer] consumption."
Beyond bars, the American craft brewing industry is a target market. "We live in a craft revolution age," he says. "People are already willing to pay more for quality."
Needs: Venture capital to support the U.S. launch. "We need to get more smart money in our company," says Algül, citing a target of $4 million to $5 million. To date, the company has closed on $1.5 million in outside investment.