PG Exclusive Research: Wine Reigns Supreme; Beer Opps Bode Favorable

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PG Exclusive Research: Wine Reigns Supreme; Beer Opps Bode Favorable

The year 2010 is projected to be a challenging sales environment in most retail industries, according to published forecasts. Many consumers are changing their buying habits in today's economy. Some are "buying down" with less expensive products in selected categories, while others are postponing nonessential purchases. How can supermarket retailers adapt to this trend to protect and increase sales of alcohol beverages in their stores?

A recent Beverage Insights study showed that supermarket retailers are turning most frequently to wine as the most important source of sales growth in the alcohol beverage category. Beer was rated behind both wine and spirits as an overall growth opportunity in the category. This may be partly due to the consumer shift away from buying alcohol beverages on-premise to buying in supermarkets and other retail venues, which favors new purchases of wine and spirits. Of the beer subcategories, only high-end domestic achieved a rating near the leading wine and spirits products. It should be noted that dollar sales of beer in supermarkets far exceeds that of wine and spirits, as shown here, but the current growth opportunity appears greater for wine and spirits.

For the study, a self-selected sample of retailers was asked to rate sales growth potential and projected space allocation for subcategories of beer, wine and spirits, as well as to rate category management performance for the subcategories. Responses were measured for the total group and for two subsets of chains: those with 50-plus stores and those with fewer than 50 stores.

High-end domestic beer earned the highest rating for the beer category, followed by value-priced, imports, premium-light and premium-regular.

This 2009 growth-potential rating represented a reordering of preference from the 2008 Beverage Insights study. High-end domestic beer ratings led in both studies, but value-priced improved from fourth place in 2008 to second place in 2009. The mean ratings of imports and premium-light decreased as sales growth opportunities in the most recent study. Supermarket chains with 50-plus stores expected much stronger high-growth potential for high-end domestic beer than did retailers with fewer than 50 stores. In fact, the smaller chains were much more pessimistic about sales growth of every beer subcategory than were larger chains.

Survey participants were asked to rate the importance of beer, wine and spirits to consumers' basket ring and for attracting consumers to the supermarkets to buy the alcohol beverage products. In both cases, spirits' ratings improved significantly from the 2008 study.

Beer was rated well behind wine and spirits as an important element of supermarket customers' basket ring, despite the sales data previously presented. Category managers from chains with 50-plus stores and fewer than 50 stores provided similar ratings for high basket ring importance for wine (80 percent ±) and spirits (50 percent ±), but parted company on high ratings for beer. The larger chains rated high importance at 56 percent, while the smaller chains rated high importance at 37 percent.

When asked about the relative importance of the respective categories for influencing consumer shopping trips, retailers provided the same ranking order as for the basket ring questions. But the differences in the mean ratings suggest that alcohol beverages were seemingly less important in getting consumers to the stores than in filling their shopping carts once they were in the stores.

As previously noted, ratings for spirits improved by approximately 20 percent over the 2008 study, while wine increased slightly and beer was unchanged.

So what’s the bottom line? While research in The Beverage Insights report showed that beer is positioned behind wine and spirits, it still represents a favorable opportunity for further growth in the supermarket alcoholic beverage category. At the same time, beer dollar sales are much higher than wine or spirits, so the opportunity for real growth is more limited. High-end premium beer led the way, especially for of category managers of the larger chains.

-By Joe Weston

The full report is available by visiting: