For most retailers, creating a merchandising strategy for the beer category requires a firm grasp of the basic rule of supply and demand: When consumers demand a particular brand of beer, retailers respond by offering more of that product on their shelves or in cold cases. Similarly, choosing the amount of space to give domestics, imports or microbrews, as well as the allocation of different case sizes, is also determined by the products' movement through the store.
However, there are a number of pressing factors that affect the retailer's ability to merchandise based on simple consumer demand. Along with stringent liquor laws in many states across the country, retailers also consider distributor plan-o-gram suggestions, national and local beer promotions and cross-merchandising opportunities.
"Retailers have to consider that there are different laws in different areas, like in Indiana, where supermarkets can't sell cold beer, and Ohio, where strict liquor laws dictate price," said Don Marsh Jr., buyer for Marsh Supermarkets, Inc., the grocery chain based in Indianapolis. "National trends don't mean as much when it comes to merchandising beer on the local level, so we keep track of our own product movement and what's going on in our different markets. Right now, the most common size package we sell in regular domestic is a 24-can case, and in microbrews and imports it's six-packs or 12-packs of glass bottles."
Consumers overwhelmingly prefer to purchase their beer chilled, a demand that has retailers scrambling to find additional space for beer in their cold cases. While some have plenty of cold cases to house the vast majority of their brands, others place beer items wherever there is additional space.
With consumer interest in chilled beer items growing, retailers often take advantage of the opportunity to introduce new brands and new products to shoppers in the place they are most likely to make a purchase -- in the cold cases. Despite these efforts, enforced laws sometimes interfere with the retailer's ability to expand the beer coolers or to place inventory in available cold cases throughout the store. "In some of our stores, our merchandising is mandated by state laws that won't allow us to display beer in any part of the store other than the beer aisle," said Kevin Copper, store buyer for Sterk's Super Foods, Jasper, Indiana. "But, where we can, we divide up our merchandising by putting some in cold cases near the dairy items and the rest on shelves at room temperature. We usually put the best-selling products in cold cases, but we do some experimenting with new items because consumers tend to purchase it more if it's already chilled -- the convenience of buying it cold is a big factor."
In the New England states, microbrews are a hot commodity. Consequently, retailers along the east coast focus a lot of their attention on microbrews when determining merchandising strategies and developing plan-o-grams for beer items.
Again, this tactic is based on sales and consumer demand in a highly specific market, disregarding the overwhelming volume of domestic beer that most retailers sell in other markets across the country.
"We have over 100 beer stockkeeping units on our shelves, including national brands, imports and local and regional brews, and they are merchandised based upon consumer demand," said Bernie Rogan, spokesperson for Shaw's Supermarkets, West Bridgewater, Mass. "There are a lot of brew pubs here in the New England area and each of our stores carries a different mix of product based on the local popularity of each brand. In Portland, Maine, Old Shipyard is popular, in New Hampshire it's Red Hook and in Vermont it's Long Trail."
According to an ongoing internal reporting project conducted by beer manufacturing giant Miller Brewing Company, Milwaukee, premium light beers sell more cases and bring in more profits than any other products in the beer category. Regarding the top 25 selling brands in supermarkets, all but two are domestic brands.
Miller also reports that the supermarket beer shopper tends to buy domestic brands more than imports or microbrews, as more than 75% of beer sales in these stores are from the Miller Brewing Company, Coors Brewing Company and Anheuser-Busch Companies.
"We have seen foreign beers on the increase in our stores, with other products looking relatively flat. The 12-pack sizes were good sellers for a while, and 18-pack in brand names like Coors, Miller and Budweiser, but that was when we could achieve a $9.99 price point -- now we have to sell them for $10.99 or $11.99," said Ross Nixon, vice president of merchandising for Dahl's Food Markets, based in Des Moines, Iowa. "We also used to have large warm sections in our beer category, but now we have remodeled and have gone to nearly all cold cases, with very little at room temperature."
Nixon also reports seeing a decrease in the number of six-packs in cans, but a tremendous increase in the purchase of six-packs and 12-packs with glass bottles. Miller Brewing Company's studies also confirm this trend, with reports revealing that the vast majority of beer sold in supermarkets is in multi-packs, led by 12-pack bottles, 12-pack cans, then six-pack bottles.
Aside from liquor laws and shifting consumer purchase trends, another issue facing retailers is the constant push from manufacturers to get their brands on the shelves and in cold cases in stores. Beer suppliers often present retailers with their own plan-o-gram suggestions, end cap requests and floor display ideas.
They also provide valuable proprietary information regarding consumer demand, purchasing trends and other pertinent information, which retailers take into consideration when planning merchandising strategies. But despite these efforts from suppliers, retailers are ultimately in command of the final allocation of goods.
"For us, the domestic premium brands bring in the biggest profits because of volume; they represent five times the volume of imports and 14 times the volume of microbrews," said Jeff Schouten, director of efficient consumer response and sales information for Miller Brewing Company. "Regarding temperature preference, most consumers want cold beer. Based on the results of nearly 20,000 customer intercepts by our company over the years, we have learned that 86% of shoppers in supermarkets prefer to purchase cold beer versus room temperature, and 99% of shoppers in convenience stores prefer chilled product."
During these marketing events, retailers often have an interest in placing individual brands on end caps or floor displays to draw more attention to the product that is being promoted.
Miller's studies have determined that the combination of well-placed advertising in conjunction with in-store merchandising is most effective in ensuring successful supermarket beer promotions. The company also reports that feature advertising and in-store displays together generate a 173% case lift compared to a simple discount price, which alone generates only a 33% lift.
As retailers take figures like these into consideration, they are also focusing on cross-merchandising opportunities that present themselves nearly year-round.
Some, like the H.E. Butt Grocery Co., San Antonio, Texas, have found effective and efficient ways to cross-merchandise beer with other grocery items throughout the store.
And, while some of the cross-merchandising coincides with seasonal events, at times it also coordinates with large promotions from major beer advertisers.
"We're trying to do more things with cross-merchandising beer with different products throughout the store. In Texas, we can pretty much do cross-merchandising year-round with picnic items like charcoal, plastic forks and paper plates in the summer, and for hunting and the Super Bowl in the winter," said Rusty Woodland, beer category manager for H.E.B. "Our individual stores often set up floor displays and end caps based on promotions that the beer distributors are doing, and a lot of these promotions are related to major events like the Super Bowl."