Expert Advice: The Four P's of Selling More Beer, Pt. 2

How to get your piece of the $1-billion craft-brew pie

Charles "Chuck" Kovach, beer strategy consultant

craft-beer set in convenience store

NEW YORK -- So we’ve established that craft beer is a lucrative opportunity—a $1-billion opportunity—for convenience store retailers. Here’s the “how.”

It begins with an annual beer-category plan. Don’t have one? No worries! Let’s review key beer segments:

  • Domestic premium: Leaders Bud Light, Miller Lite and Coors Light hold about 50% share of c-store volume. These brands are frequently purchased in c-stores and enjoy strong distribution.  Stabilize their volume by continuing to place them on promotion and display to generate store traffic.
  • Value segment: Value-price beer is overdeveloped in convenience stores. It’s a low dollar ring, over-spaced and in decline. Consolidating value space to make room for leading craft beers is a wise decision.
  • Craft segment: C-stores sell one-fifth the volume of craft beer of other channels. This is where a bold statement can be made by c-stores! There’s tremendous momentum and opportunity for craft beer in c-stores. Craft is a high dollar ring, enjoys high growth, and it’s underdeveloped and under-spaced. Set lofty craft-beer volume objectives, and leverage the four Ps of marketing to maximize craft-beer sales.

So, what are the four Ps of marketing?

Products: The top craft-beer brands are Sam Adams, Sierra Nevada, Blue Moon and New Belgium.  These franchises sell well across the United States. Regional craft brands have localized strength: Sweetwater is strong in Georgia, Great Lakes in Ohio. In California, Kona and Langunitas are strong performers.

Meet customer demand by carrying top national and market-appropriate regional brands in 6- and 12-packs. Nielsen and IRI list top craft skus; I recommend using grocery data for assortment decisions, as grocery sells five times more craft beer than c-stores. C-stores can’t carry the same breadth of brands as grocery, but focusing on top 20 to 25 SKUs will ensure c-stores meet consumer expectations.

Placement: C-stores can’t carry as broad an assortment of craft beer as competing channels. That’s okay. Here is where c-stores “double down,” except unlike card-playing, it’s not a gamble.

On average, c-stores carry 8% of their SKUs in craft beer, competing channels 32% or four times more. It’s time to increase c-store craft-beer SKUs to 16% of space. Place the products early in the cooler traffic flow, preferably the first door. Be proud of your improved merchandise selection!

In five- and six-door cooler sets, devote one full door (about 16% of the space) to craft beer (see photo below). In four door sets, the first door should have at least two-thirds of space devoted to craft beer. What areas to trim to find space for craft beer? Value beer: low ring, in decline, and two-times over-spaced and overdeveloped in c-stores.