MICRO MANAGING

Microbrew beers have become the mighty mites of the beer case.While sales of traditional beers have been flat and imports are losing some of their spark, sales of microbrews -- made by breweries that produce less than 15,000 barrels of specialty beer per year -- continue to skyrocket, largely at the expense of inexpensive "budget" beers."As of right now there is no stopping the microbrew beers. I

Microbrew beers have become the mighty mites of the beer case.

While sales of traditional beers have been flat and imports are losing some of their spark, sales of microbrews -- made by breweries that produce less than 15,000 barrels of specialty beer per year -- continue to skyrocket, largely at the expense of inexpensive "budget" beers.

"As of right now there is no stopping the microbrew beers. I think they will continue to grow," said Oscar Sicola, liquor and beer buyer-merchandiser at Fiesta Mart, Houston. He added that Anheuser-Busch is expanding distribution of Seattle-based Red Hook to the Houston market, a move he expects to further spur interest in the microbrews.

Fiesta Mart has expanded its microbrews to the point where they now occupy about half of the warm shelf space in suburban "A" stores, and even encompass two-thirds of the shelf space in one location.

"A big benefit of the microbrews is that they are not as price-sensitive as other categories of beer, and they allow us to add some uniqueness to our stores and stock some brands that some of our competitors might not," said Mike Bot, buyer for beer, wine and liquor at Coborn's, St. Cloud, Minn., which operates 10 freestanding liquor stores and sells beer in its Mason City, Iowa, supermarket.

"Consumers are generally drinking less alcohol, but drinking 'better' alcohol," said Gary A. Hemphill, vice president of information services at Beverage Marketing Corp., a New York-based research and consulting firm. "It seems that rather than buying a case of a low to moderately priced brand, many consumers are now choosing to purchase one six-pack of a high-priced specialty beer."

Howard Hodgson, buyer for beer, wine and liquor at Heinen's, Warrensville Heights, Ohio, agreed. He said that while the microbrews are growing strongly in his stores, they still encompass only about 4% of total beer sales.

"The microbrews are taking a little bit from the imports, and I think people are moving up. I don't think that they are losing so much from the premium -- the Buds and the Millers, per se. I see the Busches and the Milwaukee's Bests losing a lot, the lower-budget beers. I don't see the core Budweiser business losing much," he said.

"I think the microbrews will continue to sell well through 1996 and probably at least through the rest of the decade. The better ones -- Sam Adams, Pete's Wicked Ale, Pyramid, Sierra Nevada -- keep getting stronger," said Bob Jennings, buyer-merchandising manager of the beverage department at Raley's, West Sacramento, Calif.

Robert S. Weinberg, president of R.S. Weinberg & Associates, a St. Louis-based consulting firm, said he expects the domestic specialty segment, which encompasses microbrewers, contract brewers and brew pubs, to more than double its market share by the year 2000 to 3% of the total beer market.

"The current growth of the domestic specialty has been so preposterously spectacular that people refuse to believe that this will ever slow down," Weinberg said. But he cautioned that because of the microbrews' generally higher retails, he does not expect them to exceed 5% of the total market.

And despite their growing market share, Weinberg finds the major national brewers do not feel threatened by the microbrewers. In fact, all of the majors have either purchased all or parts of microbreweries, established their own microbrewing arms or created brands that appear to be from microbrewers.

"The majors are very pleased with the microbrewers because these guys have rekindled the public's interest in beer. I don't see any animosity to date," he said.

Retailers have been tailoring their beer aisles, adding more microbrews to take advantage of changing consumer tastes.

"Last summer we created a section in our beer box for the microbrew beers, and it has worked very well," said Jennings of Raley's. "The only problem is that you just don't have the room to have the huge selection that you'd like."

Tom Roesner, buyer for beer, wine and liquor at Seaway Food Town, Maumee, Ohio, said Seaway expanded its microbrew section late last year.

"To make room for the microbrews, we took some of the low-end beers out," he said. "We basically doubled our case and our section is now about 8 feet of the case, except for the bottom shelf."

While microbrewers don't have the advertising budgets of the major players, retailers are devising creative ways to increase sales of the microbrews.

Magruder Inc., Rockville, Md., has developed a pick-your-own six-pack program with the more than 50 different brands of microbrews.

"We find that people really enjoy if you put out empty six-packs and let them fill them up," Mark Polsky, senior vice president, told SN. "They like to try one of this, one of that and one of the other. We've been doing this for about a year now and it works pretty well."

Fiesta Mart stimulates microbrew sales through temporary price reductions.

"There are so many microbrews that we can't get them all in the ads, but they all seem to do well and they produce a lot of dollar revenue because they have a lot of high dollar rings," Sicola said.

Hodgson of Heinen's said locally produced beers are among his best-sellers.

"The prize jewel right at this time in Cleveland is Great Lakes Brewing, a local, regional brand. We also have another one called Crooked River that is brewed right in downtown Cleveland. They are both doing well. Plus, Crooked River is on tap at Jacobs Field and the Arena, so it has a lot of local support," he said.

But Hodgson said the proliferation of microbrews is beginning to cause some merchandising problems.

"Determining which new beers to carry is getting more and more difficult. Unfortunately, a lot of them are now unpasteurized, and that means that they require refrigeration. That is really chewing into the cold space. So it is going to become more and more selective, and the guys that got there first and are selling well are going to be the ones that we maintain. It is going to be pretty hard to unseat them from the cold space," he said.

Fiesta Mart's Sicola is also beginning to experience space problems.

"As of now, about 85% to 90% of everything that comes in we are putting in. The way those things are impacting the market and the success they are having, space is getting to be real tough. We're starting to have to look at the category with a fine-tooth comb and raise our standards, so to speak," he said.