ALBERTSON'S, RALPHS TAP KEP BEER MARKET

BARBARA MURRAY

LOS ANGELES -- Albertson's and Ralphs supermarkets sell keg beer, according to some of the largest beer producers in the country. Despite some drawbacks to handling sales, it has the potential to become a slowly growing niche, sources told SN.

Ralphs Grocery Co. here is trying hard to let customers know it offers the service in select stores, and "Albertson's is very active" in [keg beer] in the southern California market that Ralphs and Albertson's share, according to a spokeswoman for Coor's, Golden, Colo. Albertson's provides kegs in 36 states, with California being the strongest. The kegs are promoted either by stacking a chrome keg on top of the cooler, or using a neon sign, saying "Kegs Available," or a price card that gives the prices per keg for each of the top 3 brewers, the spokeswoman said. They don't keep inventory on site; customers pre-order and a distributor will drop it off. Stores do occasionally carry some on-site kegs around major holidays and college graduations, but the best bet is to reserve one in advance.

"The whole keg in supermarkets is driven by the retailer to provide options for their consumers. It's beneficial because if their customer is buying a keg, he or she is probably buying party goods and food as well. It's divisional, in Albertsons.' Each division decides what they need," she added.

"Albertson's is a chain that has been pursuing that business aggressively the last couple years," agreed Mike Hennick, director of communications for Miller Brewing Co., Milwaukee. "It's a growing market, but it's very small."

He said perhaps about half of Albertson's stores -- especially in California and Florida -- carry kegs to go, and he explained that Albertson's pursues it because keg beer sales "gives them an entree to selling the rest of the party goods: the paper goods, chips and dogs and everything else.

"Yes, it is a growing market. We're pursuing it with people helping them [retailers] out with 'Kegs To Go' neon signs to help drive traffic," Hennick added.

Aside from the active southern California market, supermarket sales of keg beer are regulated state by state, and in the case of some states, county by county.

"Keg beer sales follow the same seasonality as overall beer sales, peaking in the summer months," said George Fuchs, vice president, Supermarket & Drug Segment, National Retail Sales, Anheuser-Busch, St. Louis, which also supplies keg beer to the two chains.

Kegs (or barrels) are offered in three standard sizes: 1/6 barrel, 1/4 barrel and 1/2 barrel. A 1/4 barrel is sometimes referred to as a "pony keg" and is half of a 1/2 barrel, used for smaller gatherings. Prices range per market as determined by the retailer.

The storage of kegs is an issue supermarkets face, Fuchs said in response to a question from SN about obstacles encountered by supermarkets that sell keg beer. "Kegs have to be kept cold, and they are large, heavy and hard to handle. In most states the retailer has to supply the tapping equipment, and many don't like getting into that end of the business."

Wholesalers can direct retailers to a supplier for tapping equipment and can also provide guidance and input for properly storing draft beer, Fuchs added.

"We do not see the keg beer business as a growing trend in supermarkets, due to the cold storage issues and the difficulty in handling. However, there will be targeted opportunities for retailers to feature keg beer in some locations and the overall trend is growing on a very small base," he said.

In stores in Santa Monica and Long Beach, Calif., visited by SN in June, Ralphs "Beers by the Keg" ceiling dangler said: "Tap into all your favorites! Choose from 15 imported beers, 17 domestic and 22 microbrews. See customer service desk for details."

Don Cicero, director of banner markets for Unified Western Grocers, also in the Los Angeles area, said he sold beer by the keg when he was with the former Alpha Beta chain as a store manager in 1975-76, and said he tried keg beer as a way to generate some business.

"Were the Lakers playing? We'd put up a big sign and do an incredibly big business. If you're looking to pick up extra sales, it's a good way. Labor Day presents an opportunity. Put it out there and let people know you have it, and you'll move kegs," he said.

"If you can upgrade them to a bigger unit, they'll drink it or get it because they don't want to run out," said Cicero.

"We got a lot of kegs back with a gallon or so left in it. It's convenience, the not-running-out factor. If I'm competitive, why would I let them go down the street and get it from someone else?"