This summer, beer makers sponsored a variety of sports activities and concerts, from beach volleyball and World Cup soccer to music festivals and an adventurer's round-the-world, hot-air balloon voyage. Millions of dollars are spent annually on contests, sweepstakes and giveaways, but do such events benefit the supermarket?
Anything that creates excitement and generates traffic in the stores is good, said Lori Willis, spokeswoman for Schnucks Markets in St. Louis. The large number of big-screen television sets sold means more family gatherings to watch sports, and, although Super Bowl is the king of sports parties, summertime sees its share, too. Home-based parties are great targets for beverage promotions, she said.
Becky Wallace, beer buyer for the 46 Super S Foods stores in central and south Texas, said that in rural communities where there are no major sporting events, the beer industry gets involved in hunting and fishing.
Anheuser-Busch's recent "Catch Big Jake" promotion drew a lot of interest among fishermen in the lakes area, she said, since catching a tagged bass could reel in $1,000 or even $1 million. To win, you had to catch a fish, not buy any beer, and she was not sure if the Big Jake contest helped sell beer.
"In Texas in the summertime, beer sells, and you don't have to do much to promote it," Wallace said. The national fishing contest was sponsored by the Busch brand and was supported by the National Fish and Wildlife Foundation. It was expanded this year to 40 markets, with one tagged fish placed in one body of water per market.
Occasionally, a beer promotion will take an ethnic slant, as Heineken USA did this season by joining with Black Entertainment Television for its Summer House Party experience. The company was looking to connect with African American consumers, who currently purchase one out of every four Heinekens sold, executives said. More than 100 Summer House Party kits, including provisions from a Heineken party tub to a pack of playing cards, were available for consumers to win.
"Promotions" also has a second meaning: discounts. If a retailer does carry on the discount cost, the retailer gets a lower price. Breweries send the display racks and POS material to the wholesaler. The chain decides what its stores will carry, and sets all the promotions in a computer system, with the brewery doing the paperwork.
"The chain stores are going to take any money the breweries are going to give them," said one wholesaler, who wished to remain anonymous. "It's a blanket effect. As far as the retailer getting a benefit -- yes, they get better merchandising, better pricing and more attention as they participate in these promotions."
Each supplier has an authorized display for the week, explained Jeff Lowrance, spokesman for Food Lion, Salisbury, N.C., and the wholesaler works with the store manager to build the displays. Where legal, the displays can become creative, with themed giveaways like golf equipment, water skis, floats and rafts and the like, he said.
Miller Brewing Co., Milwaukee, keeps track of what percentage of supermarkets use the company's displays and the promotional pricing, to get an idea of how well the distributors are working with the supermarkets, said Mike Hennick, director of marketing communications.
But, he said, it's difficult to prove cause and effect of beer promotions. "Advertising has to work on a couple of different levels. Think about it -- if a competitor has the same display and the same pricing, which one are you going to buy? It has to do with image and taste. All those elements have to work together. We try to hit all the cylinders to ensure improved sales."
According to market research firm ACNielsen, Schaumburg, Ill., beer sales were up by a healthy 5.1% for the 52 weeks ended June 8 in the food, drug, mass and convenience-store channels combined, but up by only 1.1% in units. The statistics include regular beer, light beer, stout, ale, porter, near-beer/malt beverages and malt liquor, but not malternatives.
"Part of what's happening is people are continuing to trade up," explained Gary Hemphill, senior vice president, Beverage Marketing Corp., New York, a market research company. "Imports are growing. People are trading up to better-quality beers, and these products tend to cost more," Hemphill said.
"This summer, we are seeing a focus on malternatives, which are malts but carry spirit manufacturers' names. Most of these are being introduced through the major brewers. Promotionally, a lot of money is being spent. For retailers, it's important to take advantage of the promotional opportunities that the brewers present. Summer is definitely a key season for selling beer, and it tends to be consumed more in hotter weather."
In U.S. food stores, beer sales were up by 4.9% in dollars but only 0.2% in units. However, in equivalized unit measures, volume was up by 2% in the food store channel, to 441 million units. The C-store channel beat the food stores, with a 2.3% increase to 553.9 million equalized units. Dollar sales in food stores was over $7 billion, while in convenience stores it was $9.2 billion, according to the same ACNielsen survey.
Some say the best way to sell a lot of beer is simply to put a hot price on it and stack it up in massive displays. "Even though custom-made promotions tailored to a retailer may generate excitement within the beer category, shifts in volume towards a specific brand or package are still driven by price points and display activity," said Rick Kelly, beverage buyer for K-VA-T Food Stores (Food City), Abingdon, Va.
"We do some [promotions] through our frequent shopper program, especially in regard to NASCAR," Kelly continued. "We have the Food City 500 at Bristol Motors Speedway, and the Food City 250, a Busch race in the Busch Grand National series [Winston Cup] in the fall. Those are our sponsored races."
Interest in these events is keen, he said, and it becomes an overall theme, tying in the whole store. Usually a beer brand, like a Bud or a Miller, he said, will join in through a frequent shopper ValuCard giveaway or something of that nature.
Another way retailers benefit from big national promotions is through IRCs, or instantly redeemable coupons, said Food Lion's Lowrance. The suppliers usually offer IRCs or other types of couponing to the consumer for themed products like charcoal, paper plates, or they may offer $5 off a meat purchase or a deli platter. "We have tried these, and some have been successful," Lowrance said.
Other than those, he said the new malternatives, like Skyy Blue and Bacardi Silver, are selling well and have driven the specialty category this year. Lowrance and some others said the alcoholic beverage laws that vary state by state make it hard for a chain that may operate in different states, as K-VA-T and Food Lion do, to participate in tie-ins.
The summer of 2002 is no different from summers past, Lowrance said. "Our focus remains on working with the wholesaler to reduce out-of-stocks and offer the consumer a good variety of products."
However, this summer did boast one of the most unusual sponsorships with Bud Light's connection to the hot-air balloon voyage of Steve Fossett, who flew around the world starting from Australia and landed safely July 3.
With every televised news report about the flight, viewers saw "Bud Light" on the balloon or on the computer keyboard inside. The Smithsonian Institution, Washington, has even asked to have the balloon placed in one of its museums, said Rick Oleshack of the Anheuser-Busch marketing department, perhaps turning a beer sponsorship into a permanent display in the nation's capital.