Larger pack sizes, in-store displays and innovative products continue to pace supermarket beer sales.
By Craig Levitt
It may be time for retailers and brewers to raise their beer steins in celebration as the strong summer sales momentum spilled over into the fall and winter.
While beer sales posted modest gains overall during the past year, food retailers outperformed other retail segments by a substantial margin. According to Chicago-based Information Resources, Inc. (IRI) for the 52 weeks ended Nov. 1, beer dollar sales at food, drug, mass and convenience stores accounted for more than $23.5 billion, up a modest 1.1%. However, food retailers enjoyed an impressive 4.7% increase during the same period.
The biggest differentiation in dollar sales between grocers and all channels was in the domestic premium category, which was up 4.0% at grocery versus a 1.1% decrease channel wide. Domestic premium and domestic super premium dollar sales were more in line, with grocers up 8.9% and 10.7% respectively versus growth of 7.2% and 8.2% for all channels. Industry insiders say several factors have contributed to the success supermarkets have enjoyed with their beer sales.
“One of the major trends that is directly impacting supermarkets is that beer shoppers are shifting to larger cases because they are buying more beer on each occasion and are making less visits overall,” says Bill Laufer, vice president, supermarket channel for St. Louis-based Anheuser-Busch. “There is also a trade down occurring in the category, with some consumers trading down from premium to sub-premium brands as they look for affordable options within the category. Supermarkets need to be aware of the evolving consumer demand.”
IRI figures support Laufer’s claim that larger pack sizes have become more popular. For the same 52-week period, dollars sales at food retailers for 18-, 24- and 30-pack 12-ounce cans were up 6.0%, 5.5% and 13.2% respectively. Sales at all channels for the different packaging options were also strong, garnering 3.0%, 2.3% and 13.5% improvements across the board.
While some consumers are trading down, there is still a large portion of beer drinkers at the other end of the spectrum. Other strong sellers at supermarkets are the 12-pack 12-ounce can import segment, whose nearly 6.0% dollar sales improvement is outpacing overall supermarket beer sales, as well as craft 6- and 12-pack 12-ounce cans.
Imports and specialty beers shine
“The import and specialty segments are becoming increasingly important to grocery retailers,” says Steve Ward, vice president of national accounts for White Plains, N.Y.-based Heineken USA. “According to Nielsen, 21% of volume in grocery is coming from import and specialty brands but 30% of the dollars. So these are very profitable segments. They drive dollar sales way beyond their volume.”
Heineken USA has been able to capitalize on both the success of larger pack sizes and the popularity of import beer with its Heineken DraughtKeg. The DraughtKeg holds the equivalent of 14 12-ounce servings and carries a $20 price point versus the average $24 price point for an imported 12-pack.
Ward says the DraughtKeg is a high-margin item that can really drive up impulse purchases. Heineken USA has specifically designed racks available to retailers so they can merchandise the Heineken DraughtKeg in and out of the beer aisle. Based on the success of the Heineken DraughtKeg Heineken USA plans to roll out the Newcastle Brown Ale DraughtKeg in March.
“Newcastle Brown Ale has been a very successful recent addition to our portfolio,” says Ward. “The good thing about Newcastle Brown Ale, and an important point for retailers, is that it appeals very strongly to craft beer drinkers. Craft beer is really quite a complex category for retailers because it depends an awful lot on variety and moving in and out of packages every month. Newcastle Brown Ale is simple for retailers because there are very few SKUs. So if a retailer wants to attract craft beer drinkers, Newcastle Brown Ale is an import that plays like a craft.”
As with most other categories, innovations, such as the DraughtKeg, and new products are critical to driving expansion within the beer industry. Pat McGauley, vice president, innovations for Anheuser-Busch says recent introductions such as Bud Light Lime and Bud Light Golden Wheat have done a great job of bringing new drinkers into the category while delivering incremental volume and higher margins to retailers. In February, Anheuser-Busch plans a nationwide rollout of SELECT 55—which it is calling “The Lightest Beer in the World”—following a highly successful test market launch.
This spring, Diageo North America launches its Red Stripe Light nationally. Steve Cohen, vice president of sales for the Norwalk, Conn.-based company, says Red Stripe Light provides an opportunity to drive new drinking occasions for existing drinkers as well as new occasions for consumers looking for a lighter option. It was also important for Diageo North America to keep Red Stripe recognizable to consumers.
“We’ve kept everything that consumers love about Red Stripe, especially the stubby bottle with the painted label, but gave it a lighter taste and an easier more refreshing finish,” says Cohen. “Brands like Red Stripe and Guinness are icons and in this economy we know that consumers are turning to tried and true brands they know and trust.”
Guinness just celebrated its 250th anniversary with a limited edition Anniversary Stout in draught and bottles in select cities across the country. Cohen says Diageo is also tapping into a growing segment of consumers seeking distinctive premium quality beers as Harp is now available with a fresh new taste and new packaging. Red Stripe is also now available in 16-ounce cans.
The Boston Beer Co. is celebrating its 25th anniversary with retro packaging and special POS material. According to Jim Koch, founder and brewer of the Boston-based brewery, makers of the Samuel Adams brand, the celebration is being supported with an extensive television advertising campaign. In addition to the campaign, Samuel Adams Coastal Wheat, which Koch says is the first American Hefeweizen, is now available in stores.
“The key to the craft beer category is having the right amount of variety,” says Koch. “It is also easy to get too much clutter. So retailers need to build the category around strong brands and have just enough variety to keep the consumer interested. Too much variety leads to consumer confusion.”
In efforts to meet changing consumer demands, Crown Imports now offers its flagship brand, Corona, in 18- and 24-pack bottles. Bill Renspie, senior vice president of national accounts for the Chicago-based company, says that the much of the brands current success [It is the number one imported brand according to IRI] is a direct result of increased national marketing, consumer driven product introductions and relevant value-added consumer promotions.
Renspie is also quick to point out that Crown Imports portfolio extends beyond Corona. “Corona Light continues to be a significant source of growth, especially in the grocery segment, capitalizing on changing consumer tastes and benefiting from being offered in the new pack sizes,” he says. “Modelo is again up double digits and is now available in 18- and 24-pack can packages and Pacifico and Negra Modelo continue to post solid results.”
Cross-promoting the beer category throughout the store is nothing new. In a Heineken USA promotion called “Make Room for What Matters” and running around the Super Bowl, consumers who buy a 12-pack of Heineken or Heineken Light and $10 worth of deli or fresh produce will receive $3 off that cross purchase. Ward says in states where it is legal that is an instantly redeemable coupon in-store. There is also a mail-in rebate version of the same program. For its Newcastle Brown Ale brand, Heineken USA is running a similar promotion with Terra Chips, which runs from February through March.
In the first quarter of 2010 Anheuser-Busch is focusing on sports and active lifestyles. Their promotional year begins with the Michelob ULTRA Resolution promotion, which taps into the trend of adopting a more active lifestyle in the New Year.
That is followed with support of the Bud Bowl promotion running through early February and features cross-promotional items for Super Bowl parties. February also begins Anheuser-Busch’s NASCAR sponsorship. March rounds out the first quarter with a basketball promotion.
Diageo runs promotions across all of its brands, which, in addition to Guinness, Harp and Red Stripe include Smithwicks Ale and Smirnoff Mixed Cocktails. Cohen says Diageo has a deliberate approach with couponing that is timely, occasion driven, channel specific, features brands in the portfolio and is available in Spanish.
“These coupons are designed to spark multiple purchases across the Diageo total alcohol beverage portfolio, which drives consumer traffic into stores and incremental sales of our core Diageo Guinness brands and Smirnoff ice,” says Cohen.