Pouring Profits

Grocers should make the most of the exploding craft segment, but the beer category also offers other avenues for growth.

Take it from Toni Ketrenos, beer, wine and spirits buyer for Portland, Ore.-based New Seasons Market, who, in reference to the Rose City's distinction as home to the most brewpubs per capita in the United States, enthuses: "You couldn't pick a more exciting time to be selling beer in Beervana!"

Adds Ketrenos: "We put new brews in our coolers nearly every week and keep the assortment in constant rotation to attract core beer customers on the hunt for what's new and exciting. Since each of our stores has a different footprint, and each of our neighborhoods has a different mix of clients, each beer cooler schematic is managed by that store's department manager. They have the best pulse on what their customers want."

New Seasons' cooler selection consists of a large section of 22-ounce and 750-milliliter bottles, with the rest mostly craft 6-packs.

To slake customer thirst for such products, Ketrenos holds regular "Meet the Brewer" nights and features craft beer on ad nearly every week in New Seasons' chain circular. "Sometimes it's a hot price on a mainstream 6-pack; sometimes we use it to introduce a new small local brewery," she notes. "I work with the breweries and distributors to make these most impactful by planning them around deeper-than-usual post-offs and new product introductions."

Indeed, Ketrenos' upbeat outlook is reflected in recent category figures from Schaumburg, Ill.-based Nielsen, which noted overall dollar volume growth of 5.3 percent for the 52 weeks ending Nov. 10, 2012, with the premium segment seeing a rise of 2 percent and craft/microbrew items enjoying an 18 percent surge.

Masters of the Craft

The popularity of craft items dictates a certain strategic approach. "With the proliferation of craft brands and packages, and the potential for out-of-stocks, we are recommending that retailers optimize their beer cooler offerings and focus on products that are contributing to volume and growth," advises Mike Potthoff, VP, large format at St. Louis-based Anheuser-Busch, whose latest products include Beck's Sapphire, a smooth golden pilsner launched on New Year's Eve, and Budweiser Black Crown, featuring a blend of two-row caramel malt and four types of domestic hops.

"Every new SKU has to earn its space by bringing incremental sales via velocity, new shoppers, differentiation, or come with brewer marketing support," Potthoff says. "Grocers should consider piloting the new high-end SKUs that do not meet these criteria on the warm shelf, creating a proving ground to be considered for the cooler. Winning retailers are putting craft brands in the wine section, both on the shelf and on display. The craft and wine customers are closely aligned, and making craft available in the wine section allows the retailer to capture a 'plus one' purchase occasion. Anheuser-Busch can also analyze the reset process through hurdle rates and space-to-sales metrics to provide suggestions to ensure in-stock, cold and beer category profitability."

As further proof of the craft beer-wine nexus, Chicago-based MillerCoors recently helped Food Lion grow its craft beer share through out-of-category displays featuring Leinenkugel's Summer Shandy 12-packs and Biltmore Riesling, supported with case cards featuring text-to-win information and four weeks' inclusion in Shopper's Companion e-mail blasts giving secondary prize packs to weekly winners. The result was Leinenkugel's growth of almost 200 percent at the Salisbury, N.C.-based grocer.

Joe Whitney, director of sales and marketing at Chico, Calif.-based Sierra Nevada Brewing Co., says many grocery retailers have struggled to stay competitive with the variety of offerings available from specialty beer retailers. "The latter rely on special release, in-and-out items to drive excitement, which is a pace that's often unrealistic for traditional retailers," he says. "We created our High Altitude series and our Ovila series to better integrate with their timelines. These are high-end seasonal items with just two UPC codes between them, allowing traditional retailers to participate in some really coveted beer releases without having to rewrite shelf sets every 30 days. This is a new approach, and there is a ton of excitement about it in the market."

Last year, Sierra Nevada introduced its "Where Can You Go?" program to support the launch of its Pale Ale and Torpedo Extra IPA in cans, during which "we were able to catch the attention of more than 30,000 drinkers who shared their outdoor adventures with us," observes Whitney. Sierra Nevada also offers a summer Beer Camp, which gives fans chance to be a hands-on brewer for two days at company HQ. "Both programs not only drive sales at retail, but also tap into a lifestyle and unique experience around our beer," Whitney says.

Going Global

Craft beer isn't the only standout in the category, however. Although he acknowledges that it's "growing at a phenomenal rate," Nick Lake, senior director of category management at White Plains, N.Y.-based Heineken USA, notes: "The latest trend figures indicate that imports are generating just as much absolute growth. Upscale beer is more popular than ever, growing 1.5 times as fast as mainstream and value combined. The upscale imports segment, where consumers are looking for a higher-quality beer experience and where Heineken USA's brands play, stands to benefit the most."

To that end, the company has leveraged "reinvented beer marketing" — what Lake describes as "aspirational and experiential campaigns, with a heavy emphasis in the digital medium." These include Dos Equis' "Most Interesting Man," Newcastle's "No Bollocks" campaign, and the Heineken brand's latest expression of its 15-year partnership with the James Bond franchise, timed to tie in with the release of the blockbuster film "Skyfall." Launched last fall, the special global collaboration encompassed "unprecedented media investment, targeted special events and public relations efforts, and retail activation that offered shoppers a '1 in 007' chance to win tickets to the movie," notes Lake.

The brand is also rolling out its new Star Bottle nationally. "Heineken is an iconic brand, so this is not a change we undertook lightly," explains Lake. "We tested the bottle's appeal across the country, and Heineken loyalists to occasional beer drinkers alike loved the new package. This transition is a major step in elevating the Heineken brand to the global stage, with the Star Bottle already in 170 countries. We believe this is a great opportunity to increase trial and conversion among non-loyal Heineken drinkers and substantially increase distribution across multiple channels and packs."

Light Touch

Over at MillerCoors, beyond the craft segment, much of the focus is on premium lights, which Ross Lipari, the company's VP of national accounts-grocery, describes as "by far the biggest segment in beer, with the deepest penetration among consumers, and … critical drivers for category growth."

For instance, according to Lipari, "The introduction of the Punch Top Can (PTC) has fundamentally changed the shape of the Miller Lite can business, driving volume and profit for retailers."

The "How do You Punch it?" campaign featured interactive demos that not only showed shoppers the functional benefit of the Punch Top Can, but also let them discover their own can-opening ritual. This initiative led to "significant growth" at such grocers as Kroger and Publix, along with increased distribution, feature and display, notes Lipari.

Whether selling craft beer or any other segment, though, the key feature is novelty. "Innovation is atop every brewer's lists these days, because that's where the drinkers' heads are," asserts Sierra Nevada's Whitney. "The people who win in this scenario are those who first create the most compelling new products and packages, and then help retailers organize their sets to maximize variety."

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"The latest trend figures indicate that imports are generating just as much absolute growth as craft beers."

— Nick Lake, Heineken USA