CHICAGO -- Display presence is mandatory for summer beer sales, and Thursday through Sunday are the key days, according to David "Bump" Williams, senior vice president, client services and global consulting, with Information Resources Inc. here.
He goes around the country asking beer/cider sellers, "How important is the beer consumer to you?"
The overall average market basket is $22, based on IRI Homescan data. When beer is in the market basket, it jumps up to $54. With a craft brew, the total rises to $68, and when imports are in the mix, the basket averages $73. These figures are rounded and based on food-drug-mass channels combined, excluding Wal-Mart.
Larger displays at multiple points in the store is his advice. A study conducted by IRI last year showed that 42% of off-premise brand decisions across beer, wine and spirits categories are made in-store. A study published by IRI this year -- "Driving Sales and Profits through Effective Merchandising" -- showed that 60% of beer buyers look for deals when they enter the store, and 47% of them shop around for the best price.
"Given current pricing pressure in some categories, and margin demands across all, the need for more effective merchandising has intensified," said that study. Beer displays in the supermarket lobby give the greatest lift, a 62% increase in volume, the study said, while next is the store perimeter, with a 50% increase (see chart on page 38) . The beer aisle (42%), back-end cap (38%), front-end cap (36%), other locations (29%) and a wing (27%) followed, based on IRI InfoScan Supermarket data for the two weeks ended July 22, 2001, and Aug. 5, 2001.
This year brings a sharper focus on cross promotions, Williams said. "If you run Budweiser on Cinco de Mayo, and run it with a barbecue sauce, charcoal or a chip, you drive your market basket up and you get an incremental lift with all three brands."
Joint promotions appeal to the consumer. "It's not a new idea, but there is more of a focus on finding the right products and categories in the right stores," Williams said.
If a retailer doesn't have much space, say in a smaller urban store, he should pay more attention to the demographics of the trading area around the store, and pick the right product, whether it's a six-pack, 12-pack, suitcase or single-serve. "Don't merchandise the high-end Grolsch or Stella Artois in a lower-income neighborhood," he said. "And please don't merchandise malt liquors in a Greenwich, Conn., store, because you're not going to move them."
Sometimes a wholesaler gets an incentive from a brewer to push the high end. So he goes to the retailer and explains it's high-turn, saying, "We think this is a perfect location," until the retailer takes it, Williams said.
"The wholesaler makes out because he has moved product. The retailer sells one or two units or a case of it, but then it's dead real estate," said Williams. He said he sees "a lot of mismanaged shelves across the country," for example, a store in a white-collar neighborhood with 20% of the shelf dedicated to sub-premium brands, when 10% might be more appropriate.
For summer, Williams is encouraging retailers to use tubs of ice with single beers in them, to give the shopper the idea of an immediate consumable. This method was tried in some Arizona stores last summer, in convenience stores, small independents and some chain stores, he said.
High-quality point-of-sale material is more of a drawing card, and bigger is better when it comes to displays, because it drives impulse sales.
IRI will work with retailers on variety optimization, Williams said, having the right products in the right store for the right consumers.
Based on an analysis IRI did for a major importer of 12-pack glass, Williams said, "If you take your price up 2%, your glass 12-pack will suffer an 8% sales decline. That 2% increase in profit was not a smart move. It would have lost volume and profits. There are certain price thresholds that we will calculate for them. For example, $7.49 can move up to $7.69 and not suffer any loss. If you are at $7.99 and move down to $7.79 the volume you will pick up will more than offset the price drop."
Sometimes retailers wonder what will happen to their volume if their competition takes its price up. The answer, Williams said, is that you can be 5 cents above or 5 cents below and it won't matter, but more than that will.
The third big point is retailer compliance, or execution. "If you want to be very, very efficient and get a great return on the money you are spending on merchandising, make sure you don't run out. Have larger displays and multiple points.
"If I have a major Bud ad for the Fourth of July and have displays in 50% of the stores, those stores would have 90% of the volume."
BEER SALES DURING SUMMER HOLIDAYS
As beer merchandising lift nearly doubles during summer holiday weeks (or week before for Monday holidays), these opportunities must be maximized with the right products and highest-quality merchandising.