CSP Magazine

Opinion: Three Tiers (and Cheers) for Beer

Nailing the 'triple win' in a three-tier system

A recent beer leadership conference I attended turned into a reunion of “legends” in the beer category. Alumni joined active industry leaders from brewers, beer wholesalers and retailers to look at the latest opportunities for beer.

In the dreaded “right after lunch” spot, Bump Williams, my friend and the conference host, brought out the event’s “hall of fame” panel. Beer marketing legends Bob Lachky, Luis Duran and Tom Cardella led a discussion on the “Good ol’ Days of Growth vs. Today’s Environment of Decline.” It got the crowd buzzing, conjuring up images of campaigns from “Frogs” and “Whassupp” to the “Most Interesting Man.”

It also stimulated some interesting conversation around the industry’s tier model and how c-stores fit into the future of beer.

Background Notes

The post-prohibition legal environment mandated separate distribution tiers for beer sales. This brewer-to-wholesaler-to-retailer distribution system made the beer industry unique. Brewers built brands while local whole salers sold and delivered beer one store at a time.

As wholesalers and c-store operators grew to become valued members of their communities, strong local relationships among the tiers have been a driver of c-store success with beer. The latest NACS SOI data indicates that, at more than 12% of c-store sales, beer is important to the channel.

Nielsen data from 2016 shows c-stores had a whopping 59% of off-premise beer sales.

But while c-stores are critical to beer, sometimes they are an afterthought in planning. I asked some key industry stakeholders about this.

“It’s easy for beer marketers to focus on the big occasions and holiday weekends, because it is when they can communicate to larger groups of people getting together,” said Josh Halpern, vice president of small format for Anheuser-Busch. Tom Blair, MillerCoors’ vice president of national accounts for the convenience channel, said, “Traditionally, beer brands were built in the on-premise, then adopted for home in the large-format channel.” Kevin Bartholomew, president of wholesaler Ben E. Keith Co., said, “Chain c-stores have been receiving the majority of the focus due to their store count growth, which has been impacting local independents for some time.”

Facing Retail Reality

Joe Patti, partner and director of The Partnering Group, said convenience “often frustrates marketers because of the channel’s attributes of smaller store footprint and unique store operational realities.” He says successful marketers are “attuned to the needs of both the c-store operator and the c-store shopper, which are very different than the large-format operators.” But a new dynamic driven by millennial and Hispanic shoppers could be beneficial: Consumers are migrating to “value convenience over price and tend to buy for the immediate occasion,” Blair said. This is c-stores’ sweet spot.

Ben Galvin, manager of small format for Founders Brewing, said effective execution is “hard to do,” and that a “limited amount of retail space brings constraints on the ability to be creative.” His team is “focusing on sampling and impressions” with specific single-serve programs.

A-B has “put more focus in both assortment, cross-merchandising and promotion with simplified in-store communication,” Halpern said. It is zeroing in on “the shopper coming in daily for immediate consumption,” as well as the shopper coming in to “grab a 12-pack to watch a game with friends.” Blair said MillerCoors “now builds plans based on the c-store occasions and the brands and pack sizes that fit their needs.”

The “triple win” happens, Patti said, when “retailers enable their suppliers to come back to them with custom, relevant programs and solutions.” In that situation, “the retailer, supplier and shopper all win, achieving an opportunity for profitable long-term, sustainable growth.”

Working with all three tiers is worth a hearty cheer.


Joe Vonder Haar is CEO and founding partner of iSee Store Innovations LLC. Reach him at joev@iseeinnovation.com.

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