In late August, most people think about going back to work or school.
Not retailers. They've learned it doesn't pay to wait on building year-end promotion plans. Soft drink makers, brewers, spirits manufacturers and wineries are ramping up their wintertime holiday promotions and just about ready to stake their claim on the valuable display real estate in each supermarket. Retailers need to be ready to secure the strongest deals that complete their larger total-store strategy.
"It's been a tough year overall in the beer industry," said Jeff Vukelick, executive vice president of Try-It Distributing, Buffalo, N.Y. "I think a lot of it has to do with the economy, the war and the weather in the Northeast. The holiday times will be critical for everyone," even more than usual, he and others told SN.
Supermarkets keep losing share-of-trip to club stores and other high-volume buying venues, so it is imperative that they maximize the beverage category during this specific time period, according to Bill Wyman, president of Rockwell Consulting, Ridgefield, Conn.
"Strategically, a retailer and a manufacturer -- a leading category captain of the beverage aisle -- should lay out a grid, from the early part of November to the end of December, or even the first week of January, of what should be promoted, and when.
"There are so many drinks now. They all have a place, and can add value, if the plan is correct. It must draw people into that aisle and then increase the size of the transaction in the aisle," Wyman said.
The profusion of beverages can be a boon to fourth-quarter sales, with its heavy focus on holiday entertaining, but it can also be a bust if display footprints are not executed in a thoughtful manner -- the multiple signage and graphics can confuse the consumer, retailers concede.
Rob Giusti, buyer for Andronico's Markets, Albany, Calif., told SN he's going to change some of his strategies from last year, to focus more on bringing quality wine at a value price. Some Andronico's stores have 2,000 different wines, and one of them carries 300 Italian wines alone.
"I think people forget that a nice bottle of wine makes the meal that much better; it adds to the experience."
Retailers in states where wine and liquor can't be sold in supermarkets have to concentrate on other beverages.
"Make sure you stock up on mixers and fruit drinks," said Betsy Tooker, an owner of Top's IGA Supermarket, Plantsville, Conn. "Mostly it's cranberry juices, sodas like Coke and Pepsi, but the big No. 1 is ginger ale and 7-Up. People make punch for parties using those."
She also likes to push chips, crackers and snacks with sodas.
To keep shelves from going out of stock, Tooker advises starting well before Thanksgiving, ordering responsibly, bearing in mind that there will be promotions on all of these drinks every week. She orders 10 cases instead of two, because "everybody waits till the last minute" and the wholesaler might run short. She enjoys being known as "the only store in town that has it."
"It's pretty basic. Try to link everything together," said Tooker, who was the IGA International Retailer of the Year for 2003. "Keep a list of what you've sold the year before and figure it's increased."
In studies, nearly 50% of consumers going into a store shop from a list and will not deviate from it, no matter what people say about impulse, consultant Wyman said. He noted many shoppers today keep two sets of lists. In some markets, there is a liquor list that is not connected with the supermarket.
"Let's say I'm planning my shopping and I need beer, wine, Coke or Pepsi, orange juice and some kind of fruit juice," he said. "If I live in a state that permits me to do it all in one store, I can; otherwise, I have to separate the list."
Even in states that do not permit sales of alcoholic beverages, retailers can secure a greater portion of the beverage list if they effectively cross merchandise what they have, he noted.
"Chilled orange juice with related items next to it, or alternative beverages next to it has the chance to increase multiple purchases and enhance margins. But you have to understand the entire beverage process. It can't be one-dimensional," Wyman said.
The perennial problem of out-of-stocks is a constant threat to retailer profit during the fourth quarter, and requires extra vigilance. Unfortunately, both -- the first by the Coca-Cola Research Council in 1996, and a second, updated poll by the Grocery Manufacturers of America last year -- indicate little has been done to reduce the problem of OOS items in the intervening years: 15% of any item on-ad are out of stock when the consumers come to the store, according to both surveys.
Another study viewed the issue on a worldwide basis and found the out-of-stock rate topped 10%, indicating it is a universal challenge, but one that hits particularly hard at year-end.
"It's a big problem, magnified when you get featured items," Wyman said. "If [supermarkets] continue to have 15% out-of-stocks, where are their customers going to go for great quantities?"
One consumer alternative in particular -- club stores -- are particularly dangerous to traditional retailers because the pack sizes sold there often removed the need for consumers to re-stock their home inventory, he warned.
"Every time I go there, I take out the next two or three times I would have gone to the supermarket for it," Wyman said. "I am buying three or four times as much as I buy in a supermarket."
Another point is execution. "When you have a feature ad and display out there, make sure all stores in the chain have the display up," said David "Bump" Williams, senior vice president, client services and global consulting, Information Resources Inc., Chicago. "We noticed 40% to 50% of the stores in a chain did not have displays up. And, the 50% that did have displays had most of the volume."
"One has to be extremely clever with the display idea just to get permission to build it," said Sandra Wright Kibby, vice president of Wright Distributing, New Braunfels, Texas, whose family business handles Miller beers for supermarkets in 13 counties.
"The major brewers provide us with the promotions," said Try-It's Vukelick, who delivers Anheuser-Busch, Labatt USA, Heineken and Guinness to Tops Friendly Markets, among others. "Michelob has the Thanksgiving fireplace, and you can use it all the way to New Year's. The key is to get the floor display."
Like most distributors, he is used to putting together programs that drive people into the stores, and tying in with related products, such as Hormel party trays, so that retailers and vendors both benefit.
"We like doing tie-ins," agreed Fred Gambke, senior vice president of national accounts and sales development for Grolsch and Seagram's coolers. One that worked well last year and will get a replay this coming season rewards consumers for buying both the coolers and a can of nuts with a $3 mail-in rebate or $2 instant redemption coupon. Gambke said he favors such promotions because they give the retailer the opportunity to put out value items, or allow retailers to promote any brand of nuts they want to move.
Support for last year's program drove Seagram's coolers sales up 14% vs. the previous year, Gambke said. This year's malt-based coolers are called Winterberry.
Besides rebates and coupons, other tie-ins range from hockey team endorsements and DVDs to more traditional gift packs of glassware.
For beer and malternatives, outside of summer, December is the biggest time, and retailers take advantage of promoting the heavier winter beers, all of which hit the shelves with eye-catching packages.
"Wintertime is when you can build a display of seasonal beers," said Giusti, Andronico's buyer. "In the summertime, you have the weather to help you sell it. In wintertime, they are looking for something different."
Coca-Cola and Dr Pepper are working on a new partner, while Seven-Up will offer something a little different for November: a promotion tied to the Grammy music awards. Every kind of beverage gets on the bandwagon. Ocean Spray offers recipes for cocktails using its juices; Tazo Teas is trying to position its new lattes as an alternative to eggnog; and Glaceau vitamin water would like to remind people its electrolyte-filled products can help them recuperate from the flu -- and holiday-party hangovers.