Making Room for Beer
As brew SKUs expand, retailers must keep up without going overboard
The beer category has exploded with countless brewing styles, hundreds of hops and unexpected ingredients – it’s enough to make any retailer’s head spin. As a result, the aisle often becomes a hodgepodge of legacy brands that have existed since before Prohibition sitting beside a local craft beer with a name that would make a grandmother blush.
While the number of available beer SKUs has grown exponentially, grocery stores rarely have the resources to add an extension to their building to accommodate. Alternatively, they must become resourceful about the way they go about stocking their beer aisles.
With beer tastes changing, retailers have been driven to create an assortment that appeals to all shoppers ranging from the hops snob to the brand-loyal seasoned drinker to the thrifty college student. Alternatively, retailers can benefit from showing restraint in the variety of beer they stock and choosing only products that will be most profitable among their shopper base.
“The retailer has a vast assortment of beer in every store,” affirms Rick Laxague, director of national accounts for San Diego, Calif.-based Green Flash. “Their decisions are to add the best products and brands to attract new shoppers, increase basket ring and overall dollar sales. By mixing up how they showcase beer brands, they will generate excitement for the category.”
Vikas Satyal, senior director of category development at White Plains, N.Y.-based Heineken USA, says the biggest change he has observed in the beer category is that retailers are starting to discuss how to “right-size” their beer aisles to maximize sales without stocking too many SKUs that drive up distribution and logistics costs.
“Specifically with craft, retailers have been excited about the local boom they are experiencing in many of their markets due to the micro-breweries experiencing so much success,” he says. “But they’ve also faced a bit of a cross-roads in trying to figure out what the optimum number of products to stock should be, where they should be placed and how to avoid a situation where they continue to add SKUs that don’t merit the velocity. This is where a clear understanding of an SKU’s composite ranking across various metrics – balancing velocity, repeat rate, category exclusivity, etc. – is very important so the wrong SKUs aren’t deleted or the right SKUs don’t get enough facings given their demand.”
Getting the Most Bang for Your Brew
Jimmy Ellsworth, national account director for Cooperstown, N.Y.-based Duvel USA, urges retailers to take a strategic approach to stocking their beer sections, including taking packaging and shelf space into account. For example, Ellsworth points out that if a typical 750 milliliter offering measures 3.4 inches wide versus the typical eight inches required for a six-pack, and over the course of four months the space allocated to the 750 ML item has generated $191 per linear inch while the six-pack has generated $162.50 per linear inch, the return on investment of the 750 ML is 15 percent higher than the six pack.
On the other hand, party packs have not gone out of style. Satyal says Heineken has found many retailers are seeking out innovative packs for party occasions that offer convenient solutions. To cater to this need, the company recently developed an 18-pack cooler that boasts a cardboard packaging, allowing consumers to chill their beer by simply removing the top of the case and adding ice.
Speaking of chilled beer, Ellsworth also warns against neglecting the variety of cold beer that is available.
“The first step is making high-end craft beers available in the cold box,” he urges. “We are investing in new packaging, people, marketing and slimmer margins to entice both the retailer and the consumer.”
Exploring The Beer Tree
To help an unnamed major national retailer get past its beer woes, Heineken recently designed a Consumer Purchase Tree (CPT) that assists with assortment planning. The project’s overall goal was to define how a beer aisle should be reset to reflect how shoppers make decisions about the type of beer they purchase. The CPT was based on the specific retailer’s sophisticated shopper card data and allowed Heineken officials to help scope the entire tree, and share category solutions with the retail team. The solution included an analysis that showed brand and pack leakage to a competitor while offering new ways to engage shoppers through educational programs targeted to them.
Creating in-store displays that up visibility for a retailer’s most profitable products is a great way to boost revenue, and beer is no exception. George Ward, director of national off premise accounts at Boston-based Boston Beer urges grocers to use displays to drive excitement for occasion-based impulse purchases such as tailgating, holiday entertaining and large sports events. He also suggests boosting excitement by offering top-selling brands in standalone displays, as opposed to grouping them in with other breweries.
Ward further believes that these displays look and sell better than those with multiple brands set by style, and they have further added value if they promote a pricing special, which should be displayed prominently to show the buyer the value. According to Ward, craft beer should also be strategically displayed throughout the store.
“Craft beer is still an impulse purchase for many drinkers,” he says. “We recommend displaying craft beer at key locations in the store where shoppers might stop and pause, like at the end of aisles or near the checkout. We also recommend cross-merchandising where it makes sense – with meat, fish, cheese, produce - and sampling beers with food, which can ultimately lead to incremental purchases.”
Retailers have started thinking outside of the box with their beer promotions. For example, Wegman’s partnered with its hometown brewery, Genesee Brew House, a brand of North American Breweries, to include new products in the Wegmans Menu Magazine. Genesee even expanded the distribution footprint of its craft beer to match the circulation Wegman’s magazine.
There is a certain excited energy surrounding the beer section of a grocery store once the seasonal pumpkin beer starts making an appearance. Consumers see the pumpkins smiling up at them from the beer labels and get excited for the Halloween season ahead. The same can be said during the home stretch of spring when the summer ales begin to take over.
Rob Bair, national accounts for San Leandro, Calif.-based 21st Amendment Brewery, says in-store programs tend to see the most success when centered around holidays or other events.
“Our most successful programs have centered around our Americana Imagery on our packaging and the natural tie-in that creates for holidays such as 4th of July, Memorial Day, Presidents Day, Repeal Day, National Watermelon Day,” he says.
As the beer category continues to evolve, it is the job of the retailer to evolve with it while still maintaining a profitable selection. Grocers now have the opportunity to play around with different stocks of beer to discover their shoppers’ favorite brews.
“It’s an exciting time for the beer industry, which has seen consistent growth over the last few years,” Ward insists. “Many progressive grocery stores are bringing more voices into category management process, producing better results, and ultimately profit by supporting local, regional and national Independent American craft breweries and leading styles like IPAs, seasonally and innovative new brews.”
Anheuser-Busch Pours On Hurricane Relief
As Floridians and Texans braced themselves for hurricanes Harvey and Irma in September, Anheuser-Busch was ready to respond. The company got innovative and filled its beer cans with emergency drinking water to be delivered to victims of the storms.
The St. Louis, Mo.-based company sent over 800,000 cans – of water to various regions of Texas and Louisiana as Harvey swept in. As the U.S. was hit with Hurricane Irma within only a few days, A-B was right there again, delivering over 310,000 cans of clean, safe emergency drinking water to Florida.
The company halted production of its Cartersville brewery on Labor Day to make sure a supply of drinking water would be available as the hurricanes drew closer. A-B also worked with the American Red Cross to distribute the water along with the help of its wholesale partners including Southern Eagle Distributing, City Beverages and Gold Coast Eagle Distributing.
“Putting our production and logistics strengths to work is the best way we can help in these situations” said Bill Bradley, Anheuser-Busch’s vice president of community affairs at the time of Hurricane Harvey. “Having successfully delivered three truckloads of clean safe drinking water, when we received the request for additional shipments of water, we were happy to be able to help. By pausing our production line to produce more emergency drinking water, we are ensuring that we are always ready to support American communities in need.”
In addition to the canned water initiative, A-B donated $1 million to the American Red Cross’ Annual Disaster Giving Program to help ensure the Red Cross could take immediate action to the disaster victims.
Beer for a Cause
North American Breweries has been partnering with retailers to help raise money and awareness for local charities. Hannaford and local New England food banks partnered with Magic Hat during the winter to help provide support to those in need.
"It was an easy to execute cents per case sold donation by Magic Hat that created visibility through in-store displays,” says Chris Schneider, strategic accounts director, East, for Rochester, N.Y.-based North American Breweries “The program generated increased sales and a strong donation to an important cause.”
Additionally, the New York Walmart team partnered with the Buffalo Bills Alumni Association and NA Breweries’ Labatt Blue to support “Cure the Blue,” an initiative that promotes prostate cancer awareness and education while raising funds for cancer research. Walmart promoted the initiative with Labatt Blue displays while the Buffalo Bills Alumni Association participated in store appearances to heighten visibility.