Beer shopping? Just the facts, please
Evolving craft beer market creates competition for taps, shelf space.
With a new wave of breweries opening in West Michigan — and across the nation — beer distributors have placed an added emphasis on facts, as available tap handles and shelf space continue to shrink.
With more than 60 craft-specific brands and another 40 domestic and import brands, Alliance Beverage Distribution has seen its sales model shift dramatically during the past decade, said Tim Wille, craft brands manager at Alliance.
“When you look back at the mid-2000s, when craft was just starting to really emerge, retailers would just take whatever was new,” said Wille, who managed Logan’s Alley for 10 years prior to joining Alliance five years ago. “Now, the decisions from retailers are much more fact-based, and our structure is different and we can go to market with craft-specific teams.”
Each account now sees up to four sales representatives from Alliance, including craft-only, non-alcoholic, wine and a general sales representative, said Brendan Gary, Alliance’s director of marketing.
In the past, the distributor would send one person into an account and sell the entire book of products offered by the company, and the sales often were based on the weekly promotion from Miller Brewing Co., the distributor’s major brand.
“Before, you never talked about the liquid,” Gary said. “Craft beer has made us focus on the beer in the bottle more than before. It’s actually changed our selling approach quite a bit, and it’s even trickled into the domestic side.”
Wille said retailers were at first a bit resistant to the change in sales strategy and concerned by four sales representatives from one company walking through the door. The change, however, was embraced, Wille said.
“They quickly realized the value in it, because they saw us executing on every level and each sales team member knew the product better than before,” he said. “It operated like four companies calling on an account weekly, with four product lines being sold, but it all shows up on one truck.”
With fact-based selling at its core, Alliance also had to focus on bringing on quality partners to sell.
Because of Prohibition-era laws, distributors are needed to act as a middleman between alcoholic beverage producers and end-use retailers. A change in state law in 2015 allows brewers under a certain production level to self-distribute to retailers.
When looking at potential products to sell, Gary said the beer quality remains at the top the list, but the brand and people behind the breweries also are important.
“One thing that has gotten really big for us is focusing on the people,” he said. “It’s a partnership, so we want to deal with people that we like and who are in the business for the right reasons. We like working with the homespun people with a good story.”
The partnership with breweries doesn’t have to extend much beyond the walls of the brewery, according to Wille. Many breweries enlist a large team of sales representatives to help push their brands in addition to the selling performed by distributors, but sales representatives are just an added bonus from breweries, Gary said. The only necessary help from breweries is for support at beer festivals and brewery events at bars and restaurants, he said.
While an actual brewer is always the best sales person, Alliance doesn’t require, or even request, a brewery to have feet on the ground.
“It’s a nice asset to have, but we don’t rely on a brewery sales rep to sell,” he said. “We firmly believe that it’s our job to sell the beer, so a sales rep is a nice bonus, but that’s about it.”
Alliance representatives and breweries sit down once a year to determine the goals for the next calendar year, Gary said, including the number of tap handles and spots on the shelves at retailers. Alliance then goes to market and tries to hit its commitment to each supplier.
The space for beers at retail outlets isn’t keeping up with the amount of new products heading to market, however, Wille said.
“Tap handles are a finite amount of space and it’s the most competitive aspect of beer,” he said. “Fifty percent or more of retail tap handles are rotating on a weekly or bi-weekly basis.”
Breweries at one point were able to secure nearly full-time handles at various restaurants and bars, but outside of Bell’s Brewery’s Oberon and Two Hearted Ale and Founders Brewing Co.’s All Day IPA, Gary said there’s no “gimme” brand anymore.
Wille said it’s important to look at the profitability of each tap handle and to ensure the products being placed are intriguing to guests. Modern beer consumers are constantly trying new products, which is why Gary said it’s important to provide retailers with new items and brands.
As retailers push and consumers demand new products, beers can stay on the shelf longer, so Gary said it’s important to keep the freshest beer on the market.
Alliance has developed a system at its warehouse in Gaines Township that ensures a first-in, first-out shipping and receiving process, Gary said. Beer ages quickly and Wille said they want to make sure a consumer drinks a beer the way the brewer sold it to Alliance, which provides the product with its best chance for a successful stint at a retailer.
Consumer education also is increasing, and Gary said the company is cognizant of the shopper who shops by packaged date.
“We know our sales team needs to care about it and we have strict policies that make sure our products are the freshest on the shelf,” Gary said. “Consumers are shopping based on date codes, and now they want to buy a Two Hearted that is just two weeks old.”
Wille said it’s important for brewers to find their niche, and as the distribution channels become more crowded, it’s harder to compete unless there is a specialization. His advice is similar for retailers.
“Understand the styles of brand that are making the business successful,” Wille said.
For customers, he said to keep sampling beers and “have fun with it.”
Gary remains cautious about the beer available in the market.
“Consumers should make sure they know what quality is,” he said. “I still think we have a ways to go in this segment because there still is a lot of beer that’s not very high quality out there. I actually like seeing that in a weird way, because it tells us the general consumer still has a lot of education to go through.”