As beer sales begin to heat up with the weather, retailers are focusing on merchandising strategies that will maximize sales in the category.
Beer sales are up again, partially due to a strong economy, industry sources say. Moreover, the supermarket is becoming even more important as a channel for off-premise beer sales.
According to Information Resources Inc., Chicago, beer sales were up 2.2% in supermarkets for the 52-week period ended Dec. 27, 1998. The supermarket industry racked up more than $5.7 billion in sales, and case sales went up 0.8% during that period. Domestic beers still lead the pack, with Budweiser, Bud Light and Miller Lite remaining the Top 3 brands. Heineken and Corona Extra are the only two imports in the Top 10, with Corona making the biggest splash. Sales for the Mexican beer were $206 million last year, up 35.3%.
G&R Felpausch Co., Hastings, Mich., is one chain that has noticed an increase in imports. "Today, microbrews are in decline and the imports are what has been increasing," said Mort McKillop, director of procurement and direct-store-delivery head buyer. "There are so many micros nowadays [and, as a result], imports like Corona are increasing in sales. That's why Budweiser came out with Tequiza."
Promotions play a big role in beer sales at Felpausch, and McKillop says that the chain advertises beer weekly and advertises wine sometimes biweekly. Displays are done every week with specially packaged items -- like 18- and 30-packs of beer -- or on new items that have just been introduced. McKillop noted that the store has 24- to 32-foot beer sections, depending on store size.
Although promotions are run continuously at Felpausch stores, McKillop is seeing a softening in some domestic packs. "Some domestic packs are down. In the U.S., Anheuser-Busch is up, but in Michigan it's down. Certain beers are just up or down," McKillop said. "[But] Bud Light, Miller Lite, any beer in the light family is doing well."
A buyer from a large Midwestern chain, who did not wish to be identified, said that his stores have also experienced an upswing in imports. "Imports are hot right now and import 12-packs are doing very well," said the source. "Microbrews have leveled off a bit, and domestics are remaining flat. We've returned to the import craze of the 80s.
"Domestic manufacturers have jacked up the price on their suitcases and it's not a big jump anymore to buy an import beer," the source continued. "They created their own problem."
The source also credits good marketing strategies with helping to fuel the import revival. According to the source, a lot of promotions are done in the beer aisle, and endcaps are always up.
"Beer is always stacked [in the aisles]. You might see a design display from a manufacturer, but for the most part it's always stacked," the source noted. Some other promotions are done with 5-liter minikegs and loose, long-neck packages. The popular packages contain a variety of beers from the family of a specific brand.
About 25 to 88 feet of shelf space are devoted to beer, the source said. Stores run 24 to 36 feet of cold case space with additional space devoted to warm beer. Domestic beer takes up 75% to 80% of the area, while imports and micros can account for up to 25% of space. "Domestics will always have the lion's share of space and will always be bigger. It's just the nature of the beast," said the source.
Another retailer that is successfully merchandising beer is Camellia Food Stores, Norfolk, Va. According to Rick Hagan, sales manager, all sales are up.
"We're up with everyone this year. We have a high ethnic base market and we've seen good growth in the inner cities with the malt beverages," said Hagan. "For the entire beer category, we're running up 11.5% to 12% over last year."
Each month Camellia picks a domestic beer to showcase in its warm beer display, either in a designated location or in the middle of the beer aisle. The display will contain different variations of the beer, in cans or bottles. From 25 to 100 warm cases are used, depending on the size of the store. Another smaller display is used for new microbrews. "For the month of May we will be displaying Tecate," Hagan continued. "It's set on a 10- to 15-case display piece to draw attention." The beers for both of these displays are on a cycling schedule set in advance. Ad features are also run weekly, one each for premium and non-premium beers.
Camellia does not run display promotions on imports. According to Hagan, imports have been down, but glass bottle sales are up, which is surprising, since glass bottles are not permitted on Virginia beaches. "Glass bottles have picked up a share. We live in a non-bottle area because we're so close to the beach, but sales have, surprisingly, been picking up."
Hagan pointed out that brands like Corona and Molson are down in the Richmond market, and that others have fallen out of the Top 100 in terms of sales.
Another factor contributing to strong beer sales at Camellia is that beer vendors in Virginia can buy at a quantity discount when they buy in bulk. Hagan noted that this law is helpful to supermarkets that want to lower beer prices.
"We are able to get the best price so we can reflect that price to our consumer. When you have to compete with the Wal-Marts and Super Kmarts, that already have low prices, you are forced to buy to be competitive," Hagan said.
A group of Piggly Wiggly stores in Kinston, N.C., is also seeing sales increases as a result of merchandising efforts. John Morgan, general manager for 60 stores, said that the chain promotes beer more than it used too and is trying to sell larger pack suitcases.
"We're trying to get away from cheap beer and stick to the more premium brands," said Morgan. "For the most part we've done pretty well.
"Most beer sold is refrigerated, and we have displays that we tie in with ads. Obviously, anything that is promoted and displayed will do well," Morgan said.
He noted that Piggly Wiggly headquarters in Memphis, Tenn., carries out national in-store promotions with Miller Brewing Co. "We give them pretty good display space," Morgan added.
Miller and Budweiser beers are the big sellers in Morgan's stores. "Imports are not as big here because this is a rural area. It's basically Miller and Bud country," said Morgan. Microbrews don't do as well at Piggly Wiggly because of the overabundance of different brands and state regulations. Morgan told SN that state regulations in North Carolina make it hard for microbrews to market their products.