PG Web Extra: Giant Eagle Embraces Craft Beer

With craft beer continuing to rise in popularity, food retailers have greater motivation than ever to get more out of the segment. Among those doing just that is Pittsburgh-based Giant Eagle, a multiformat food, fuel and pharmacy retailer with 418 stores throughout western Pennsylvania, Ohio, West Virginia and Maryland.

"As consumers are presented with an ever-growing selection of beverages, the great taste, variety of styles available and moderate price point of craft varieties have taken hold of their attention in a significant way," notes company spokesman Dan Donovan. "Giant Eagle is working to provide customers with quality craft beer options to meet this increased interest."

Donovan agrees with the idea that the segment "as certainly become a mainstream retail offering. The more complex flavor profiles of craft beers pair well with food, and this has made beer a more popular beverage for occasions where other options have previously dominated. In these instances, when compared with wine, the price of a 6-pack of beer is still a very good value."

In response to these consumer currents, Giant Eagle makes sure to call attention to its craft items. "Capitalizing on the greater interest in craft beer offerings, we are placing a growing emphasis on craft beer as part of our total merchandising plan, including share of shelf space, display space and inclusion in the company's weekly circular," remarks Donovan.

The retailer is also keeping a keen eye on the future of the segment. "Currently, IPA offerings are very popular among customers, but moving forward, Giant Eagle will continue to evaluate options to engage new customers and sustain growth in craft beer," says Donovan. "That may look like more complex beers like barrel-aged and sours, or improved portability with cans versus bottles, but is yet to be determined. As a retailer, Giant Eagle is focused on providing our customers with a balanced and fresh craft beer selection for the best overall value to continue to engage craft beer enthusiasts."

Beer of all kinds is in big demand during the summer, naturally, but other beverage alcohol segments stand to profit, too, as the grocer is well aware. "In addition to beer, the summer months provide opportunities to merchandise and promote flavored malt beverages, frozen pouches, light and refreshing summertime wines, and lighter spirits that are popular in summertime drinks," observes Donovan. "Giant Eagle customers rely on us for expertise on the latest offerings and beverage trends, and we ensure that is reflected in our merchandising and promotions."

Craft a Winning In-store Strategy

Supermarkets that want to leverage the growing consumer interest in craft beers must make the effort, like Giant Eagle, to merchandise and promote the segment sufficiently, according to George Ward, director of off-premise national accounts at Boston Beer Co., brewer of Samuel Adams.

"Retailers most often see success when they dedicate a certain amount of space to craft beers and stock that space with regional and leading brands that drinkers recognize," says Ward. "The No. 1 thing retailers can do is make sure the lead craft brands in their market are well represented and merchandised. In any market, the top 10 craft brands will represent between 50 percent and 70 percent of the craft sales. Retailers should offer the right assortment from these top brands and position packages at eye level, which will show drinkers that the retailer is in craft business. Retailers should also make sure to represent local craft beers to the degree they sell."

Further, craft varieties "should be included during all promotion periods, grouped together in the cold box, and positioned at eye level, where drinkers can easily see them," he advises. "We recommend merchandising around occasions such as tailgating and backyard barbecues, which gives drinkers easy shopping options, and providing food-pairing options, like beef and Boston Lager or seafood and Summer Ale, as many drinkers are looking for a flavorful cooking and pairing experience. Because craft drinkers will pay a little more money for a higher-quality, fuller-flavored beer, profits will increase for the retailer and craft drinkers will be happy and satisfied."

When asked what lies ahead for the segment, Ward foresees more good news, especially for Boston Beer's brews. "The Brewers Association believes craft beer can be as much as 20 percent of the beer category by 2020," he notes. "Whatever happens, we know drinkers will continue to reach for flavorful, high-quality craft beer. While it's hard to predict what flavor profiles will grow in popularity, right now IPAs are both the No. 1-growing style and continue to remain a favorite amongst devoted craft drinkers. Additionally, seasonal beers continue to be some of the top-selling styles in the U.S., a concept we introduced first to drinkers nearly 30 years ago. We continue to see seasonal beers growing in popularity every year with the release of our seasonal styles Summer Ale, OctoberFest, Winter Lager and Cold Snap."

The Growing Craft Opportunity

Grocers that ignore craft beer could be missing out on significant sales. In its March 2015 report, "Craft Beer Production in the U.S.," global market researcher IBISWorld notes: "The past five years have transformed the craft beer production industry into one of the fastest-growing and most popular alcoholic beverage segments in the United States. The industry has experienced annualized revenue growth of 19.1 percent in the five years to 2015, reaching an estimated $5.1 billion in 2015. As consumers increasingly demand a greater variety of beers, including pale ales, lagers, seasonal beers, wheat beers, stouts and porters, craft brewers have captured a significant portion of drinkers who had traditionally purchased light and premium brand beers."

Melbourne, Australia-based IBISWorld, which has its U.S. headquarters in Los Angeles, goes on to project industry growth at "an annualized rate of 5.5 percent, reaching $6.6 billion by the end of 2020."

The report also comments on the attention bigger companies have begun to pay to the segment: "Although the industry mostly consists of many small-sized players, there has been increasing consolidation and expansion activity among some of the industry's largest brewers. Brewers such as Magic Hat and Pyramid, once significant independent brewers, have been acquired by holding company North American Breweries. Other companies, such as Sierra Nevada and Lagunitas, have constructed massive secondary brewing locations to facilitate beer distribution across a greater region of the United States. In response to the increasing popularity of craft breweries, international beer manufacturing companies MillerCoors and Anheuser-Busch InBev have aggressively promoted their respective Blue Moon and Shock Top wheat beer competitor brands in an attempt to capture growing craft beer sales."

Bud's Burgers

Budweiser has embarked on a coast-to-coast quest, aided by chef David Chang, to find a hamburger worthy of being the Bud & Burgers Champion. The contest winner will get $100,000 to further his or her culinary ambitions, as well as the chance to take part in a new six-episode cooking competition series, provisionally titled "United States of Burgers" and set to premiere this summer on the Esquire Network.

"Both burgers and beer are experiencing a renaissance of sorts," said Chang. "I love that there's nothing pretentious about the combination – it just works. A full-flavored lager brings out the taste of a savory burger."

As of April 6, otherwise known as National Beer Day – the official commemoration of the repeal of the prohibition of beer in 1933 – competitors age 21 and older can submit videos or photos online showing off their burgers and explaining why they should win. Semi-finalists will compete at 10 nationwide Bud & Burgers Championships events hosted at such major summer events as the Stagecoach Music Festival, Free Press Summer Fest and Chicago Blues Festival. A complete list of festivals and details on the contest are available on Budweiser's website.

The competition will culminate in a July 11 finale event hosted by Budweiser and Chang at the Budweiser Brewery in St. Louis, where the Bud & Burgers Champion will be revealed. Chang will also serve as a judge, alongside Budweiser's brewmasters, at the event.

In addition to the Bud & Burgers Championships, Budweiser is introducing a national TV commercial campaign and working to educate consumers on how its beer enhances the taste of a burger.

Beringer Launches Taste Station Program

Beringer has introduced a concept enabling consumers to preview wine in stores without even taking an actually sip. Currently being tested in Kroger stores in 20 states, the winery's new taste stations allow wine shoppers to sample three varietals of Beringer commercial wines before committing to a purchase. The conveniently shelf-mounted stations dispense single servings via a "flavor strip" permitting consumer trial anytime.

For the test, Beringer created the individually wrapped, nonalcoholic strips, mounted on small pieces of plastic, for three of its most popular wines: Chardonnay, White Zinfandel and Cabernet Sauvignon. The taste stations also feature cutouts for discarded packaging, so as not to generate any in-store clutter. Additionally, Beringer has joined forces with New York-based News America Marketing to install and manage the stations, thereby eliminating maintenance requirements for retailers.

The result of a year-long campaign to innovate in a highly competitive set, the taste stations usher in a new era of in-store consumer sampling and wine education, according to Napa, Calif.-based Beringer, the longest continually operating winery in California, which has been in business since 1876.

"We are tremendously proud of the research that has gone into what we know will be a category-changing addition," noted Beringer Senior Brand Manager Tammy Ackerman. "This is the type of innovation you would expect from a significant brand such as Beringer."

Since it doesn’t take up valuable floor space and provides education and eye-level engagement for wine shoppers, Beringer anticipates that the station will be adopted by multiple retailers in the coming months.

A video with further details about the Beringer taste station is available online.