BEER IS AHEAD

AMITY K. MOORE

According to both supermarket retailers and industry watchers, sales within the beer category have increased over the past year and are anticipated to follow a similar trend in the new millennium.

Statistics from Beverage Marketing Corp., a New York-based research, consulting and financial services organization, show that supermarkets sold the equivalent of 37.3 million barrels of brew in 1998, up 500,000 barrels over 1997. Although the firm has yet to compile its figures for 1999, vice president Gary Hemphill told SN "Beer sales are up slightly in 1999."

Retailers ascribe the increase to better in-store merchandising as well as heightened brand awareness on the national level due to spunky nationwide advertising campaigns.

"H.E. Butt had a double-digit year; we had a great year!" said Mickey Gallegos, beer category manager at the Texas-based chain. "We advertise the category regularly in newspaper ads as well as our in-store flier. We usually hit on Wednesdays, but every now and again we run ads on Fridays to get the weekend shoppers," he added.

Rick Hagan, sales manager at Camellia Food Stores, Norfolk, Va., said beer sales at his stores are up about 3.5% over last year. "We attribute that to good merchandising. We just have done a better job of planning our displays," he said.

"We're doing more cross merchandising, which the breweries are doing as well. We've done some tie-ins with Conagra Banquet dinners and Miller Icehouse," Hagan added.

In addition to cross-promotions held within the stores, tie-ins with local events and organizations encourages sales as well, according to Brian Roberts, category manager at Bashas' Markets, Tempe, Ariz. Like the other retailers polled for this article, Roberts said his beer sales were up this year. "We're doing very nicely on some of the major premium brands," he noted.

"Whenever we tie in with local sports teams on a sweepstakes or things of that nature, then bring in a radio station, it's worked out quite well for sales," Roberts added.

In addition to creative promotions, beer sales continue to froth due to competitive pricing and an increase in alcohol consumers.

Camellia Food Stores, despite its reputation for not being the leader in low pricing, has managed to maintain its margins, while competitors have had to raise theirs, Hagan said. "We are committed to participating in quantity purchases because we get a higher dollar ring," Hagan added.

Moreover, with a greater number of people becoming old enough to drink, sales and retailers are benefitting.

"Demographics are a key driver of beer sales, and they are improving as a growing number of consumers are reaching drinking age," Beverage Marketing's Hemphill said.

Ethnic and regional demographics can strengthen a category's sales as well. Witness Texas, where H.E.B.'s beer sales have benefited from a "True to Texas" marketing campaign generated by Miller, through which ads turn the Texas flag into the Miller logo. That emblem graces packaging, billboards, print and is similarly communicated via radio, Gallegos added.

Nationwide, packaging changes are also attracting shoppers' attentions. "Our mix has switched. It has shifted from cans to bottles," Camellia's Hagan said. Plus the introduction of the 30-pack in lieu of the 24-pack has helped drive those sales, he noted.

Additional growth at H.E.B., about 2%, is being driven by Mexican beers and Bud Lite. "I've never seen a brand really take over a general market that includes Hispanics as quickly as [Bud Lite] did in Texas," Gallegos said.

Ethnic diversity accounts for growth nationwide, not just regionally, according to Hemphill. His data shows that imports and light brews are the fastest growing categories.

"The growth of imports is being driven by a robust economy, increasing ethnic diversity, consumers trading up from lower-end products, and strong marketing of the importers," Hemphill said.

He added that light beers seem to be preferred by many consumers. To that end, 1998 data from Beverage Marketing indicates that three of the top four brands are light beers: Bud Light; Miller Lite; and Coors Light.

Unlike Hemphill, Gallegos has not seen growth among the imported brews. In fact, "imports have slowed down during the last 12 weeks," he said. "Mainly because of the price increase on Corona and others, although Dos Equis is still doing well," he added.

In the specialty brew area, Gallegos said Fat Tire is "the fastest growing [specialty import micro]. It ranked number six in an 8-month period. It does particularly well in Austin," he added.

Hagan agreed with Gallegos about the downturn in sales of import and premium beers, using beers such as Sam Adams and Corona as examples. In addition, "microbrews aren't seeing the demands here," he said. "We have a higher percentage in the below-premium categories," Hagan added.

Bashas' has likewise experienced a decline among craft beers. "Some of the craft beers have been slowing down, specifically some of the flavored SKUs. They've sort of fallen off the map," Roberts said.

However, the introduction of local brews from area pubs have offset the declining crafts. "Whether it be Mogollon or Tommyknocker, some of these local brew brands have come into stores and picked up the slack where some of the other craft beers from other states have started to slow down," Roberts added.