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From Grains to Grapes.

Byline: Jim Dudlicek

Cross-merchandising, assortment optimization and trendy formats guide beer and wine category management.

New strategies to optimize assortment, drive trial and inspire product innovation are at the forefront of category management in the beer and wine aisles.

Brewers and vintners are collaborating effectively with their retail partners to promote sales within brand families, across categories and even throughout the store via strategic cross-merchandising of complementary products.

"There are a lot of opportunities to get our brands next to the right foods," Greg McLeod, VP of grocery and mass channels at Anheuser-Busch, said at the St. Louis-based brewer's recent media open house.

On display in the company's retail immersion lab were some examples of these well-calculated pairings designed to inspire sales, generate emotion and demonstrate usage occasions, some in areas that perhaps aren't top of mind among most shoppers.

There's the logical pro football-themed promotions of A-B products with Frito-Lay snacks and Pepsi soft drinks. "We share [sponsorship of] the NFL, so it's natural to work together," McLeod noted. Other natural teammates for beer include Red Baron and Freschetta frozen pizza and Cape Cod brand snacks. New partners, but again a logical pairing for these man-centric categories: Kingsford charcoal and KC Masterpiece barbecue sauce.

"We're working to position our brands alongside consumer trends to ensure that the right message, at the right time, is seen by the right person," says Tim Gossett, A-B's VP for national retail sales and category leadership. "From the latest Shopper Poll, we know 40 percent of consumers are looking for beer to complement their food occasion. If you cross-merchandise beer displays with food, shoppers will be three times more likely to buy beer to complement their meal. Sixty percent of shoppers are buying beer to share with others, so positioning beer with other items, such as chips, helps drive basket size."

A-B's more innovative partnerships? Goose Island in the meat department, Stella Artois with specialty cheese, and Japanese import Kirin Ichiban with sushi in the deli. A-B also has designed an elaborate display that teams Stella with Ghirardelli chocolate for Valentine's Day; the display's modular construction allows it to be easily converted to an Easter promotion.

Further pairings of A-B products with different foods are showcased in the brewer's sampling program with select retailers, dubbed Brew Appetit, which McLeod explained offers shoppers "a hop, sip and a bite."

Lager Heads

A-B continues to build upon its successful Balanced Portfolio Approach, which for several years running has allowed the brewer to boost category sales for retail partners by tapping key shopper insights and developing customized plans for each grocer.

"Category management continues to evolve, and the biggest opportunities we see are around the shopper," Gossett says. "Shopper insights and third-party data continue to shape our platform and best-in-class beer category management recommendations.

Beyond understanding the shopper, he says, it's also critical to understand the specific goals of the retailer. "Once this understanding is achieved, opportunities can be gained by focusing on the key areas of space allocation -- days of inventory and store-level operational information to drive revenue, trips and basket size."

Digging deeper into shopper data to deliver further strategies and analyze why best-in-class retailers were winning in the category, A-B gathered syndicated data from nearly 40,000 retail outlets. Segmenting the data by channel type, retail route-to-market and population density, and then quartiling each cluster of accounts to determine winning retailers based on revenue per outlet, allowed A-B to see what the top 25 percent of stores were doing versus the bottom 25 percent.

"When retailers utilize our recommendations, they typically see trends above the average," Gossett asserts. "We work to provide best-in-class category management recommendations to retailers of all levels. We work to customize recommended solutions to meet each retailer's needs to help them maximize their success and win with their customer base."

In 2014, Gossett says, A-B's suggestions helped grow beer dollars (6.2 percent) and gain category share of market (up 0.62), per internal sources. "Our recommendations are built upon identifying opportunities that retailers can use to meet their consumers' needs so the entire beer category wins," he says.

The team at White Plains, N.Y.-based Heineken USA also advocates optimizing beer assortment to drive the most incremental dollars.

"Incrementality is measured by how much a new item truly grows the category versus cannibalizing other brands," says Nick Lake, Heineken's senior director of category development. "The more unique and differentiated an item is, the more incremental volume that item will add to the assortment."

Lake advises a mix of high-reach scale brands (e.g., Heineken and Corona Extra), strong growth brands (e.g., Dos Equis), and the fastest-moving national and local craft brands as being key to minimizing out-of-stocks and increasing sales. "Winning retailers are using this approach to balance assortment variety and avoid duplication," he says. "They've realized that adding more beer SKUs does not lead to more purchases, and instead are adding unique and differentiated items to their assortment to increase incremental volume and drive higher basket rings."

Further, retailers should optimize assortment flow based on insights pinpointing target shoppers, key occasions, and their favored segments and brands. "Optimizing assortment and flow is critical and can mean the difference between making and losing a sale," Lake observes.

Retailers should leverage two key trends. First, the upscale beer segment that's driving overall category growth, forecast to rise 10 percent to 12 percent over the next five years (compared with projected flat growth of total beer). "Within upscale, Mexican imports represent a huge pocket of opportunity for retailers," Lake notes. In addition to shelf efficiency, "they have strong appeal among young multicultural consumers, a demographic projected to account for 70 percent of future beer category growth," he points out.

Additionally, hard cider is finding wide appeal among both men and women in two distinct segments: the "savor" segment, featuring a lower-energy, artisan set of brands that currently represents approximately 80 percent of category sales; and the faster-growing "amplify" segment, with a higher-energy, dynamic set of brands.

Through the Grapevine

Alternative packaging in single-serve and convenience beverages is the growing opportunity in the beer and wine aisle. "The ability to take a beverage of choice outdoors or on an adventure where volume or bulkiness would be difficult has growing appeal to consumers," says Jason Carignan, chief marketing officer for Moorpark, Calif.-based Kretek International, whose partnership with Miravante Brands LLC gave birth to Nuvino, a line of premium wine in single-serve pouches that launched last spring.

"We believe that the biggest drive to the wine category specifically is the Millennial customer," Carignan notes. "The broad appeal is driven to products like Nuvino that has the single-serve pouch that appeals to the Millennial market and beyond."

Kretek has developed marketing plans for chains and independent stores. "They're in the beginning stages, but they've been a win-win already for us, and it's impressive to retailers because it sets us aside from other brands and shows that we are serious about moving the product on their shelves," Carignan says.

With an MSRP of $3.99 per pouch, the Nuvino line includes four premium varietals: Chilean Sauvignon Blanc, South African Chardonnay, Argentinian Malbec and an Australian red blend.

Continuing the theme of premium wines in more convenient formats, Napa, Calif.-based Delicato Family Vineyards, maker of the Bota Box, collaborated with a northwestern grocer to create the 1.5-liter Bota Brick, aimed at boosting that stagnant category size.

In a 24-week pilot test conducted in 109 supermarket stores in the Northwest last year, trials of the Bota Brick in the 1.5-liter glass wine section contributed to a 3.5 percent increase in 1.5-liter segment sales, while control stores not carrying the Bota Brick during the same period saw a sales decline of 4 percent in the 1.5-liter segment, according to Market6 analytics.

Bota Brick packaging, constructed with corn starch over synthetic glues, is totally recyclable. State-of-the-art bag-in-box technology allows consumers to enjoy wine from the Bota Brick for up to four weeks after opening. Retailing for $12.99, the Brick joins the flagship 3-liter Bota Box and the 500-milliliter Tetra Pak Bota Mini.

Efforts to encourage in-store trial are being furthered by Campbell, Calif.-based Napa Technology, maker of the WineStation, which allows retailers to deliver secure and automated controlled portions without the additional labor or expense of events.

The ability to provide active and effective sampling for aggressive case movement and consumer engagement gives retailers an edge in driving category growth, says Jayne Portnoy, Napa Technology's VP of marketing. The company is currently partnering with several major national and regional grocers "to bring this unique technology to their aisles, and profits to the bottom line," she notes.

Taking the lead in simplifying the planogramming process is Modesto, Calif.-based E&J Gallo Winery, which developed the industry's first proprietary category management and schematic automation systems. Using its custom category management system and set automation tool, Gallo was able to transform a major national supermarket chain's manual planogramming into an automated yet customized store-specific process.

Assortment was determined using the corporate buyer's authorization list, division/cluster data, and chain-determined key performance indicators. Benchmark schematics were created to give teams a cluster-level baseline planogram; custom store-level planograms were available to polish before turning in for the official reset. Finally, in addition to the store dry-shelf planograms, store-level data was used to assign the best items to the store-specific cold box, putting the right products in front of the right customer at the right time.

Since implementation, the grocer went from trending behind the market to performing at pace, with double-digit trend growth; dollars spent per trip have increased by double those of both beer and spirits categories. Gallo demonstrated that quality data-driven processes can meet local shopper needs more effectively, drive remarkable efficiencies and speed up time to market on new items.

"If you cross-merchandise beer displays with food, shoppers will be three times more likely to buy beer to complement their meal."

--Tim Gossett, Anheuser-Busch

"Optimizing assortment and flow is critical and can mean the difference between making and losing a sale."

--Nick Lake, Heineken USA

A Drink for All Seasons and Reasons

When it comes to alcoholic beverage choices for Americans age 21 and older, how much does the "when" of it factor into the type of drink one chooses?

Quite a bit, as it turns out: When presented with a broad selection of adult beverage types, those who drink several times a year or more clearly reach for different drinks on different occasions.

Beer is the top choice as something they're most likely to drink throughout the year (though table -- that is, not sparkling -- wine is the top choice for women and the over-65 set). Table wine gets the silver medal overall, although the second tier shows considerable variation by age and gender. For consumers age 21--44, liquor/spirits/cocktails hold this position, while wine is second choice for those 45 and older. Liquor/spirits/cocktails are the second-highest year-round picks for men, while beer holds this distinction among women. However, table wine is the top choice for Christmas.

These are some of the results of The Harris Poll of 1,951 adults age 21 and older (of whom 1,176 drink alcohol several times per year or more), surveyed online between Aug. 20--22, 2014.

Beer follows wine as the second choice for Christmas overall, although among women and those aged 65 and up, liquor, spirits or cocktails come in as the second choice to sip around the tree. These preferences all echo those seen for Thanksgiving, while preferences shift considerably as one continues to review the holiday calendar throughout the year.

Sparkling wine is the top selection for New Year's Eve, with liquor/spirits/cocktails as the second choice overall, although among women, they share this position with table wine.

On Super Bowl Sunday, these Americans turn from grapes to grains, as beer is the top selection across the age spectrum and for both men and women. Liquor/spirits/cocktails come in second, while flavored malt beverages are choice No. 3 overall; those age 55 and older turn to table wine as their third choice.

Table wines are the favorite for Valentine's Day, with ages and genders in full agreement. And it should come as no surprise that beer takes first chair for St. Patrick's Day; liquor, spirits and cocktails come in as the second most popular drinks for both holidays.

Beer also leads for Cinco de Mayo, followed by liquor, spirits and cocktails. Come Mother's Day, wine takes back the top spot, as it does for Easter.

Once grilling season kicks off, though, beer seems to hang on as the top holiday selection until things cool down. It's the No. 1 selection both overall and, more specifically, across age and gender lines for Memorial Day weekend, the Fourth of July and Labor Day weekend.

In fact, the entire roster of top five selections is consistent across all three of these holidays, with liquor/spirits/cocktails coming in second and table wine third. While perhaps less well known, flavored malt beverages are the fourth most common selection for these holidays, while hard cider comes in fifth.

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Author:Dudlicek, Jim
Publication:Progressive Grocer
Date:Jan 1, 2015
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