The director of off-premise accounts for the Boston Beer Co. says that craft beer sales are spurting higher despite slow sales in other segments of the beer category.
Grocery Headquarters: Tell us the state of the beer category at retail today. What is driving sales?
George Ward: Craft beer and domestic specialty brands are experiencing sales increases in the mid- to high-teens. Meanwhile, the overall category has been down in the low single digits for the majority of the year. In fact, sales are down by 2.1% year-to-date with the average case pricing up by about 2.7%.
Slower sales of domestic premium, sub-premium and super premium are the drivers of the dip in dollar sales, with flavored malt beverages and import sales also down in the low single-digit range.
How are craft beers faring in all of this? Why are they outperforming the category?
Craft beers are flying (ahead 14% in food stores, according to SymphonyIRI year-to-date data) and are the most compelling segment of the beer category today. Consumers are looking for more flavorful and interesting beers and American craft breweries are delivering. Craft beers also deliver an affordable luxury that sells during these tough economic times. Once consumers taste and like the more flavorful craft experience, they are sold on the product for life.
What do grocery retailers need to do to build sales in the overall category and craft beers in particular?
First, retailers need to make sure they have enough space for the craft segment’s growth and the designated space should be early in the traffic flow for the beer set. The size of the segment in their market should be the driver of space. Grocery retailers need to make sure that the five lead craft brands in their markets are well represented and merchandised in their stores. In most markets these lead five brands represent 50% to 70% of the craft business and this business and can be hurt if not handled correctly.
Retailers need to make sure that lead brands styles are in distribution and billboarded at eye level to make it totally clear to consumers that they are in the craft beer category. They can fill the balance of space with other craft brands and styles but should not let those brands confuse the lead brand offerings. It is also important to review the assortment annually.
What promotions or other activities are being offered by Boston Beer?
We are showcasing food and beer pairing promotions to show consumers and retailers that in many instances beer pairs better with food than wine. We are also conducting tastings of Boston Lager with our specially designed Boston Lager pint glass to educate consumers on proper glassware. Most recently, we executed “Stein-Hoisting” competitions across the country (www.samueladams.com/promos/steinhoist2011). We are also offering holiday packaging and holiday point of sale items for retailers.
What about new products? What are they and how are they unique from other products on the marketplace?
Our brewers are always experimenting with new styles and ingredients, focusing on brewing quality beers with distinct flavors and ingredients. Some of the unique styles we’ve introduced include our Barrel Room Collection (www.samueladams.com/enjoy-our-beer/barrel-room.aspx) and Infinium, a champagne-like style of beer that was the result of a two-year collaboration with the Weihenstephan Brewery in Germany, are examples.
Is there anything else happening with the beer category at this point?
Focus on quality promotions, appropriate product assortments and customer value are key.