HANDLING THE CASE LOAD

RICHARD TURCSIK

The days when buying beer meant tossing a six-pack into the cart are gone. Packaging options keep growing, and supermarkets are trying to keep up.

With the key summer beer-guzzling season not far off, retailers told SN they are strategically planning resets for their shelves and cold cases -- and trying to choose the right amount of the right packaging sizes to balance consumer preferences and category profits.

The proliferation of sizes also has them eliminating slower-moving items, including some six-packs, from their product mix.

The range of packaging can make consumers dizzy. The six-pack of cans is still hanging in there, but cans are also available in a mind-boggling array of larger configurations, from "suitcases" to "cubes." Bottles are available in six-pack and 12-pack regular and long necks, as well as 20-ounce and 22-ounce single-serve bottles, which are becoming the rage in many regions of the country.

"We have been doing all kinds of resets, because there are so many different sizes, especially over the last year. I've never seen so many," said Bob Jennings, buyer/merchandising manager for the beverage department at Raley's, West Sacramento, Calif.

"We're trying to redesign our schematics to de-emphasize some of the six-pack cans, and emphasize some of the other packages and make better use of what little space we have," said Brian Cain, buyer/merchandiser at D&W Food Centers, Grand Rapids, Mich.

"The six-pack used to be the cornerstone package, but now it is the package you put it in if you have room. There are other packages that are more important," Cain said.

Tom Roesner, direct-store-delivery buyer-merchandiser at Seaway Food Town, Maumee, Ohio, said he began "putting feelers out" and re-examining his beer aisles early this month.

"I don't know if I am going to do a major overhaul, but I am going to expand a little bit more on some microbreweries and cut back a little bit on some of the six-packs," Roesner said. A rule of thumb, no matter what the packaging mix: The size that sells best depends on what is on sale and promoted in a given week.

"A sale usually steers the customers into changing into a different package option. And I prefer stocking different sizes because it gives the customers some variety. In the case of many promotions on 24-packs, it gives me a chance to get a larger ring through the register," he said.

Several retail sources said 24-packs and other larger sizes will figure prominently as the temperature rises.

"I think we'll see a noticeable shift to the larger sizes this summer, once the warm weather sets in," said Mark Polsky, senior vice president of Magruder Inc., Rockville, Md. Magruder's current best-seller is the 12-pack, which accounts for about 65% of sales, he said.

"It is getting to be a case of the bigger the better. That's what the breweries want and what we want. We want the big ring and they want the bigger sales," Polsky explained.

Although margins are better on six-packs, the higher ring on 12-packs and 24-packs more than compensates. Indeed, the push to larger sizes by manufacturers seems to be rebounding positively on supermarket beer sales, according to national scanning data.

Supermarket dollar sales for all beer rose 5.7% in the 52 weeks ended Jan. 1, 1995, to a total of $5.1 billion, according to Information Resources Inc., Chicago. Unit volume for the period was 329.9 million 288-ounce cases, an increase of 3.7%.

Data on case volume gathered by Nielsen North America, Schaumburg, Ill., brings the importance of larger packs into sharp relief. For the four weeks, 13 weeks and year to date ended Jan. 21, 1995, 14 of the 15 top-selling beer package sizes were either 12-pack or 24-packs. The Budweiser 12-pack was the top seller, followed by the Miller Lite 12-pack and Budweiser 24-pack.

Retailers noted that while the addition of sizes has brought more sales to the party, it has also given them a major merchandising headache.

"It comes down to when is it too much?" said Duane Smith, a buyer at Haggen Inc., Bellingham, Wash. "Even though Budweiser is the No. 1 beer, my God, you've got a 22-ounce bottle, a 24-ounce can, a 40-ounce bottle, a six-pack glass, a six-pack glass long neck, a six-pack can, 12-pack can, 12-pack bottle, 12-pack long neck bottle, 18-pack, 24-pack and a full case. Anyway you chop it up, it is still Budweiser and there is that point where you've got to say, 'Hey!' "

Still, Smith is not throwing up his hands in despair over it all. He said he rotates ads between full cases and 12-packs to drive home the price-value relationship to the consumer. What's more, fitting the sale items in, at least, hasn't been a problem because Haggen uses a "flex" system. "Whatever is on sale that month gets more floor space," he said.

Other retail buyers sounded as dazed as Smith by the pack proliferation.

"As a retailer, I just can't see having four different packages for one item," said Jennings of Raley's. "We don't even have that in Tide detergent, so why should we do it in Budweiser beer? Instead

of doing that, I would rather add an item in the category and have more selection." About 60% of Raley's sales comes from 12-packs, he added.

When the big three brewers introduced 18-packs in his market last year, Raley's response was to eliminate the 24-pack and promote the 18-pack, because of its lower price.

"We can get the 18-pack under $10, which is a lot better price point than $14. Plus, the 24-pack was extremely hard to fit it into the cooler, so that's why we eliminated it. But now they have come out with a cube, so we are starting to reassess that," he said.

On the other hand, Oscar Sicola, liquor and beer buyer-merchandiser at Fiesta Mart, Houston, said the 24-pack suitcase is the best seller in his stores, and that suits him just fine.

"Some of the chains in town have put the 18-packs in, but I haven't yet. Why should I trade my customer down from a $15.99 everyday to a $10.99 ring? Nine out of 10 times you're going to trade profit margins, too, and I'm not willing to take that risk at this point," he said.

Nonetheless Sicola said he suspects 18-packs will be the "next trend" because they are being heavily pushed by the manufacturers. One packaging configuration he does not hold out hopes for is the 24-can cube.

"Our problem was how to get this package, which is twice as tall as a suitcase, into our cold boxes. You have to readjust shelves and go the whole nine yards. The vendors couldn't deliver as many cases on a dolly because they weren't flat, but were more of a box shape. They were here, they lasted about two months and now they are gone."

Richard Bellows, grocery buyer at Scolari's Warehouse Markets, Sparks, Nev., said for the most part his region has remained a 12-pack market, although he tested the 24-can cubes.

"We've had some trouble with the cubes. They're bulky and some of them are just poor packaging and fall apart," he said.

Walt Sumner, wine/beer manager at Harris Teeter, Charlotte, N.C., also didn't have high hopes for the cubes. He said 12-packs sell best in his stores, with 24-packs picking up popularity in the summer months, while 22-ounce singles of specialty beers are selling well in the cooler case.

"The proliferation of product sizes has been putting some pressure on, but it is also good because it forces us to weed out the stuff that is not moving," he said.

William Vitulli, vice president of government and community relations at A&P, Montvale, N.J., described beer as a "very volatile" category where, in addition to the national brands, many popular local breweries offer different sizes.

Constantly changing sizes often wreaks havoc in cooler cases, which are now constantly being reset, he said. As a result, A&P often leaves beer merchandising decisions at the store level.

"Merchandising beer in the store to portray product variety is a problem. Naturally, we are building much bigger stores to stock more items, but there is such a proliferation of sizes that we have to boil it down to individual store or district merchandising," he said.

"In most of our stores the most popular package size is still the 12-pack, because it is easily handled and fits nicely into the refrigeration units. At certain times of the year, like the Super Bowl, the suitcases are featured and they move like there is no tomorrow," Vitulli said.

So what packaging alternatives are retailers betting on to build beer sales this year?

Cain of D&W Food Centers said he has high expectations for 12-packs of long-neck bottles.

"The first really big seller to come out in a 12-pack bottle was Molson Ice. Killian's Malt is now just going crazy in the 12-pack bottles. We're selling a bunch of the Red Dog 12-pack, and as a result the regular brands -- Miller, Miller Lites, Buds -- are suddenly doing a job in the 12-pack bottles," he said.

Cain said the package is such a fast seller that it's become somewhat of a stocking problem.

"The 12-pack long necks are really a challenge because of the pack-out. The way our cooler is set up, even if it is real high, we're only going to get a pack-out of eight, which on a good day and with a good item is only an hour or two of supply," he said.

Cain said he also finds 22-ounce single-serve bottles are doing well.

"In some of our stores where we didn't have room for a 40-ounce and 22-ounce we decided to just offer 22s, but offer them in more of a pack-out. In most cases, I can sell two 22s at the same price as a 40-ounce, so it doesn't make much sense to sell a 40-ounce," he said.

Fiesta Mart's Sicola also expects good things this year from single-serve items.

"Our business is going crazy on a lot of the new single imports and specialty beers that have come out. One thing that has made our company strong is the selection and variety of the imports, microbrews and specialty beers."

Sicola said the sizes range anywhere from 11.2 ounces to a 50.7 ounce bottle of Chimay, which is made by Trappist Monks in Belgium and retails for $12.99.

Roesner of Seaway Food Town is looking for a boost in bottled beer later this year, once aluminum price increases set in on cans.

"Glass is often priced a little more than cans, but I think there is going to be a swing into glass. The beer guys said they are going to absorb the price increase until at least June. After then I think there is going to be some shift to glass just from the standpoint of sheer profitability," he said.

Jennings of Raley's said he expects volume of 18-pack cans to continue to grow.

"There are not a lot of retailers who have opted to put that in as a regular item, but I seem to think that is the way to go, especially if beer prices escalate one more time. The price point on the larger package seems to scare away some consumers," he said.

Smith of Haggen said he will be watching for progress with superpremium beer in cans.

"It looks like the breweries are trying to make the superpremiums go in cans, which has been a very tough sell. When people think of superpremiums, they think of bottles, but Red Dog is trying to make it, as is Ice House. I even hear some rumblings about Red Wolf trying to move into cans also, and some of the Canadian breweries are putting their items in cans, so it may work," he said.

Even the cubes have their champions. Polsky of Magruder said he thinks they have potential, especially with women shoppers.

"The cubes are wonderful and they are easy for the shopper to handle. I'm not worried about my people; give them a back belt and let them stack it. But it is easier for that lady shopper to pick up a cube than a case. It is balanced so she can hold it with one hand, and it even has a handle," Polsky said.

Manufacturers contacted by SN said they constantly work with retailers to find which package sizes sell best.

"We have been actively eliminating some of our stockkeeping units to keep up with the changes in terms of new products and new packages," said Mike Hennick, a spokesman for Miller Brewing Co., Milwaukee. "It certainly is a challenge to keep up with it all, but by being proactive we can identify the fast movers and more profitable packages and eliminate those that are not, making the overall beer category more profitable."

"We're very sensitive to the fact that the proliferation of SKUs is a problem for retailers," said Mark Duchovic, director of customer marketing at Stroh Brewery Co., Detroit. "What you have to do is examine the package that may have had its time in the market and replace it with packages that more efficiently meet consumer needs and wants."