The craft beer movement has been taking the world by storm for a few years now, and (thankfully for beer lovers everywhere) it’s showing no signs of slowing down.
According to the Brewers Association craft beer now accounts for over 24% of the U.S. beer market, which has a total worth of $114,2 billion. Not too shabby for about 4700 independent breweries operating across the country.
So why is craft beer so popular?
With the booming popularity of the craft beer industry came an increase in the number of breweries, microbreweries, brewpubs and of course – a higher demand for brewing equipment.
The Whirlpool Corporation saw the potential in this underexplored market niche and decided to get in on the action with their own home brewing innovation.
Want 30 more corporate startup stories?
About the Whirlpool Corporation
Over the last 100+ years, Whirlpool has gone from being a small company with one pioneering product (i.e. electric motor-driven wringer washers) to one of the world’s leading appliance manufacturers.
Today, the corporation makes approximately $21 billion in annual sales, has 92,000 employees and owns 65+ manufacturing and technology research centers. Some of the Whirlpool brands include KitchenAid, Maytag, Consul, Brastemp Indesit and many others around the world.
Competing through Innovation
Despite its global success, Whirlpool found itself competing against a rising number of both international and smaller local players in the market. These challenges hit a peak during the 2008 crisis and continued for several years after.
The CEO & Chairman at the time, Jeff Fettig, took several measures to speed up product development and create a culture of purposeful innovation. Some of his initiatives included:
- Building their own in-house incubator, W Labs.
- Changing the company’s focus from late-stage product enhancements to early-stage product breakthroughs.
- Setting up defined metrics and specific innovation goals by which to measure their success.
- Devoting around 20% of their capital budget to innovative projects.
Born in 2015, the WLabs incubator operates under an interesting slogan: “Expert innovation with a start-up attitude”, which pretty much describes what they do.
Although the incubator is part of Whirlpool Corporation, it works autonomously to design and build products based on real customer pain points.
As described by Doug Searles, General Manager at WLabs:
“As Whirlpool Corporation’s innovation incubator, we explore new product and marketing opportunities to address consumer needs.”
Having a dedicated team whose sole purpose is the creation of new and innovative products has certainly paid off for Whirlpool. Most recently, 3 of WLab’s products:
Meet Vessi: Homebrewing made easy!
The Vessi home beer fermentation system can be used to do primary and secondary fermentation, cold crashing and force carbonation. Its sealed, pressurized and temperature-controlled tank protects the beer against contamination and doubles as a dispenser.
The simplified process enables homebrewers to focus more on experimenting with new flavors and ingredients – sounds like fun, doesn’t it?
Aside from its ease of use, what makes Vessi special is that it combines the features of various home brewing appliances, saving the user a few thousand bucks in equipment.
For homebrewers by homebrewers
The original idea for Vessi is a product of SPARK – an internal business challenge that Whirlpool does with employees. A group of homebrewing enthusiasts within the company proposed the concept and the response was immediate.
WLabs eventually took over development and launched Vessi in 2016 through a crowdfunding site called IndieGoGo. It quickly sold out, surpassing its initial funding goal of $100.000 within the first week and eventually raising over $220.000.
On average, Whirlpool spends over $550 million a year on R&D – so why are they using crowdfunding platforms to launch new products?
Well, in the case of Vessi, launching through IndieGoGo helped WLabs:
- Connect directly with customers and gain a deeper understanding of their pain points and demands.
- Reduce the risks that come with traditional product launches (e.g. nobody is interested in the product, features need to be changed or added, etc.).
- Improve the product with real customer feedback.
- Save money and generate revenue.
The value of investing in innovation
Vessi’s success story is a great example of what corporates like Whirlpool can achieve when they actively encourage creativity, out-of-the-box thinking, and innovative ideas among their employees.
The launch of Vessi helped Whirlpool:
- Consolidate WLabs’ ability to transform innovative ideas into state-of-the-art products.
- Tap into a new product category that came with a new subset of customers.
- Experiment with crowdfunding as a new way to connect with customers.
- Learn about new customer pain points and values (i.e. homebrewers).
Vessi, on the other hand, benefited by:
- Getting the funding, tools, and resources needed to build its product and grow (e.g. offices, collaborative spaces, and even their own testing lab).
- Using the customer trust, credibility, and partnerships that came from being part of the Whirlpool family to expand and get a leg up over the competition.
In 2019, only 3 years after its launch; Whirlpool successfully finalized the sale of Vessi to a group called 80West Labs – the result of a partnership between Prota Ventures and KzValve (involved in the original production of Vessi).
As described by Kyle Buzzard from Prota Ventures:
“We are excited for the opportunity to continue to evolve Vessi in collaboration with the brewing community, and to create products that make brewing a more fun, accessible, and social experience.”
As for WLabs, they’re still going strong in their mission to serve Whirlpool by exploring new market opportunities for the brand.
According to General Manager Doug Searles, the company is currently looking at new ways to enhance the experience of people who cook at home.
Hungry for more startup stories?
Get inspired by 30 corporate startups from big players like Coca-Cola, Walmart, and Adobe.