Photo courtesy of Piggly Wiggly Carolina Co

Photo courtesy of Piggly Wiggly Carolina Co.

Untapped Potential: Retailers Dabble in the Draft Beer Space

Retailers are delighting beer enthusiasts with growler pours of hard-to-find brews

As a small operation, Pittsburgh-based East End Brewing Co. doesn’t have the capacity to bottle its Big Hop IPA, Monkey Boy Hefeweizen and Fat Gary Nut Brown Ale for retail distribution.

“The primary issue is space,” founder Scott Smith told SN. “We have limited brewing capacity and never had room for a packaging line.”

But what the microbrewer lacks in resources it more than makes up for in quality and local appeal. At least that’s what Whole Foods Market [4] thought when it approached Smith about providing kegs for growler pours at its Wexford, Pa., location. Visitors to the store’s Brew & Brau bar now have the option of ordering East End’s Snow Melt Winter Ale in pints and pitchers in-house, or taking it to go in 64-ounce refillable glass jugs called growlers.

East End Brewing Co. founder Scott Smith operates a draft-only microbrewery.

Whole Foods, Austin, Texas, is one of a growing number of chains dabbling in the draft beer space with little-known crafts that were previously impossible to bring in-store.

“It’s a wonderful thing because you get the chance to offer guests what they may not be able to get in a bottle,” said Nick Long, beer and wine category manager for Piggly Wiggly Carolina Co., which operates growler-pouring stations serving between 10 and 60 beers, in 10 supermarkets.

Unlike Whole Foods, in-store tastings are prohibited at the Charleston, S.C.-based chain. But the off-premise license that lets Piggly Wiggly sell beer in bottles and cans allows it to send shoppers home with freshly poured drafts in reusable 32- and 64-ounce glass jugs.

A self-described beer enthusiast, Long keeps close relationships with wholesalers and emphasizes small batch brews so that Piggly Wiggly will be considered to distribute hard-to-find beer.

Local selections from Holy City Brewing, Palmetto Brewery, Coast Brewing (when available) and the Pig Swig private-label craft line are available on tap, along with innovative beers sourced from farther away.

Rogue’s Voodoo Maple Bacon Ale, fashioned after doughnuts made in Portland, Ore.’s world-famous Voodoo Doughnut shops, is one such out-of-state import.

Read more: Super Premium Beers Top Crafts [5]

Piggly Wiggly growlers that can be used again and again cost $5, and fills retail for $6.99 to $23.99, depending on size and style. True, the concept is pricier than the beer-in-the-bottle format, but fans consider obscure drafts a worthwhile investment, according to Long.

“There is a lot of intrigue surrounding the growler stations since some brewers only produce drafts,” he said.

Indeed, while category buyers have had a field day riding the wave of crafts and sourcing inventive local beers, seasonal styles and variety packs, the draft segment is full of untapped potential.

Craft Beers on Tap

Whereas large, global brewing companies sell about 10% of their beer in draft form, a much larger portion of crafts — 30% — is sold on tap, said Julia Herz, craft beer program director for the Brewers Association, Boulder, Colo. Part of the appeal is freshness with a growing number of drinkers choosing kegs over bottles.

“Draft in the marketplace is generally perceived as a fresher beer than packaged,” noted East End’s Smith. “We can go from grains to growler in two weeks whereas if we put it in a package you don’t know how long it’s been sitting in the warehouse.”

Price Chopper shoppers can choose a 2-liter plastic bottle for no surcharge or reusable glass growlers in 32- or 64-ounces for $4 and $5, respectively.

Kevin Schulke, senior category manager of beer and wine for Price Chopper Supermarkets [6], Schenectady, N.Y., began testing a “Growler Station Express” two months ago as a way to expand on the craft beer phenomenon.

“In this business you’re always looking for new things, and the explosive growth in craft beers over the past four years pointed us in this direction,” Schulke said.

Sales in the segment were up 12% last year compared to a 1.3% drop in the overall beer market, according to Tom Pirko, president of Bevmark Consulting, Buellton, Calif.

“The big brewers sell volume and the lighter they make it the more people will drink it,” Pirko said. “Consumers have decided they want beer they can taste, they want the variation and something that has the integrity of a small enterprise.”

Read more: Spirit Sales Outpace Wine in Grocery [7]

Growler pours were a natural fit for Price Chopper’s Slinglerlands store given its volume of craft beer sales.

“There are a lot of enthusiastic first-time customers trying growlers,” Schulke said.

With taps comprising a cross-section of seasonal and local drafts, Price Chopper keeps its selection fresh. After it ran through its supply of limited edition Saranac Pumpkin Ale brewed in Utica, N.Y., the retailer transitioned to Matt Brewing Co.’s Saranac White Ale. Switchback Ale has also been a hit. The draft-only beer from Burlington, Vt., is one of Price Chopper’s more popular crafts.

“Up until now it’s never been available as a packaged item so having that as a draft beer has been very favorable,” Schulke said.

New York law allows breweries that hold sampling permits to use them at the Slingerlands store, but the chain’s strictly off-premise license restricts Price Chopper associates from letting shoppers taste before they buy. So the retailer is using the next best thing: an iPad featuring the Beer Wizard app.

The interactive app is provided by Shelton, Conn.-based The Growler Station — the company from which Price Chopper sources it 8-by-8-foot growler bar and taps. The Beer Wizard lists beer selections and price, describes styles and suggests food pairings. Available on Apple’s apps store for 99 cents, beer fans can download it and get automatic updates when Price Chopper switches out its kegs.

“If Price Chopper is putting in a Lake Placid UBU Ale they go into our web portal, change the beer and change the price,” explained Tony Lane, co-founder and executive vice president of sales and marketing for The Growler Station. “It will automatically send the change to the digital menu at the store, the Beer Wizard apps that runs on consumer devices, and the Facebook fan page.”

Social Media

At Duane Reade’s Brew York City growler stations, social media also plays a role. A recent Twitter response to a customer reads “I’m getting a porter from Kona, it’s only the beginning. Let me know which winter you want!”

In addition to updates on new beers, Brew York City Twitter followers are kept abreast of sampling events and other happenings at the drug chain’s four New York City stores. Growler stations are a major point of differentiation in three of Duane Reade’s Manhattan locations and in its Williamsburg, Brooklyn, store.

“The social platform gives us the ability to gauge real-time feedback from our most loyal customers about what brews, concept ideas and marketing initiatives work and why,” said Jackie Burrell, director of merchandising for Duane Reade. The strategy is critical to the drug chain’s neighborhood-centric approach and emphasis on local and seasonal brews. “We keep track of what’s happening and hot.”

But a successful growler model is not built on selection alone. Food retailers looking to enter the space need to ensure they can adequately execute the concept before it’s launched, noted the Brewers Association’s Herz.

“They have to man it properly and not leave the customer waiting too long,” she said. “They’re going to have to understand the sterilization needs because all of the sudden they have a dispensing system like a restaurant would.”

Read more: Craft Beer Is Top of the Hops [8]

For a small draft-only operation like East End, a retailer’s inability to maintain the integrity of its beer is a deal breaker. But when done right, local brewers will drive traffic to the supermarket and vice versa.

“They have to keep the beer fresh by turning inventory,” said Scott. “They have to make sure the beer is carbonated and doesn’t pick up a lot of oxygen.”

Price Chopper has these bases covered with taps that operate a counter pressure system that adds carbon dioxide to the growler before the beer is poured. This ensures freshness and that the jug is oxygen-free — just like the keg from which it was poured, explained Lane.

“It makes for a more stable beer product that actually has some life to it,” said Price Chopper’s Schulke. “You can leave it in the refrigerator for a number of days without any loss to quality.”

Price Chopper doesn’t have plans to expand its craft station to additional stores just yet, but the beer’s freshness makes it the perfect accompaniment to cheese and ready prepared foods, according to Schulke.

Up next is a Friday night meal deal for a fresh pizza and a growler, he said.

Sidebar: Brew York City Q&A

Jackie Burrell, Duane Reade’s director of merchandising and mastermind behind the drug chain’s Brew York City draft concept, answers questions about its inception.

SN: Growler pours are an innovative concept for a drug store. How did you come up with the idea?

JB: We were thinking of a trendy, hipster-type concept to put into our Brooklyn store. I developed the concept, and Mike DeFazio, vice president of store concepts, created the design.

SN: Can shoppers taste before they purchase?

JB: No, only at assigned tastings.

SN: Do you get a lot of repeat customers?

JB: Yes, we have many repeat customers. They enjoy trying new brews on tap as well as coming to our regularly held tastings.

SN: What sort of feedback have you gotten?

JB: We get a lot of surprise feedback from our customers when they experience a Brew York City store. The sentiment of reactions has been very positive and filled with excitement about the concept.

SN: Why is now an opportune time to serve beer this way?

JB: Growler beer is a hot and growing trend. Not only is it very specific, but also an environmentally friendly concept.

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