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The art of selling suds

There's strong potential for grocers to brew up beer sales, despite some challenges

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Giancarlo Trimarchi, co-owner of Vince’s Market, is brimming with big ideas for merchandising beer. He talks of bringing Corona into the lemon and lime section in the summertime and creating a cross-display, or featuring the boozy beverage in the meat section and educating shoppers about food and beer pairings. “It’s easy to quickly visualize how much fun and how cool it could be,” says Trimarchi, who operates four stores in Ontario—three of which are authorized to sell beer. His ideas are just wishful thinking at this point, however, thanks to provincial regulations.

As of this April, there will be 370 grocery stores across Ontario authorized to sell beer; and while many cheered its introduction into select supermarkets in the province back in 2015, grocers who sell beer face a few challenges with the category. To start, the Alcohol and Gaming Commission of Ontario has placed restrictions on merchandising, pricing and promotional activity. One key rule is that beer must be displayed in one section of the store, which means grocers can’t bring beer into other departments to cross-merchandise.

A more contentious issue is profitability—or lack thereof. “There is no margin in it … It’s costing us money to sell it on behalf of the government,” says Trimarchi. In the authorization process, grocers bid their margin rate on sales, between 2% and 6.99%. “And nobody’s winning licenses at 6.99%, so you can be sure that the average is well down in the 2% to 3% range,” he adds. “You can’t even staff the department for 2% to 3%.”

So, why get into the business of selling beer? “We felt to not have it would be a competitive disadvantage … You don’t want to be the grocery store in town without it,” says Trimarchi. “And if customers want to shop for alcohol in their grocery stores, then we need to provide that to them.”

Peter Sulak, general manager of Starsky Fine Foods, says because of the restrictions, his stores don’t do “anything out of the box or extraordinary” on the beer merchandising front. “I think the biggest appeal is the convenience to the customer and the possibility of them having a one-stop shop,” he says.

Despite the challenges, grocers can still boost sales of beer—and food items that go along with it. Heather MacGregor, executive director of trade association Drinks Ontario, says tastings (which are permitted where beer is displayed) are a great way to drive traffic and raise awareness that grocers are selling beer.

“We say the best way to sell product is to put liquid on lips because it lets customers try before they buy,” she says. “And when you’re in a grocery setting, it’s an ideal opportunity because there are so many other things customers need or want to buy. If you’re trying a really great beer, you might be thinking about what you’re having for dinner and whether that beer is a perfect match.”

The person offering the tasting could talk to shoppers about food pairings or ask what’s their occasion for buying beer, she adds. “These are really great questions to not only close the sale on the beverage alcohol product, but also drive it to a different area of the store.”

Scott Simmons, president of Ontario Craft Brewers, says data from grocery retailers shows that selling beer is indeed leading to bigger baskets. “Having a beer consumer in their stores is leading to purchases outside of beer because [the shopper] wanted to do some food matching, whether that’s premium cheese or premium deli meats or other food products,” says Simmons, who notes that the research has shown “basket size, which is critically important to any retailer, is the largest from a craft beer consumer.”

Breweries themselves can also take an active role in educating consumers about food and beer pairings. “Years ago, people would say red wine goes with dark meat and white wine goes with white meat. Well, that’s what we’re doing with beer now,” says Scott Davies, key account director at Bracebridge, Ont.’s Muskoka Brewery. “So, we’re trying to pair our beer with complementary food categories to drive that basket.”

For example, when Muskoka Brewery does tastings at grocery stores, it brings in Neal Brothers premium chips. “We are there to showcase our craft beer, but to also say, ‘This beer pairs really well with these food items,’” says Davies.

David La Mantia, owner of La Mantia’s Country Market in Lindsay, Ont., says his store has done a lot of sampling with brewers including Magnotta Brewery’s Original Craft Lager and True North Inukshuk, as well as Coors Banquet. La Mantia also features a different Ontario craft beer each week in the flyer. “Obviously, I can’t put it on special because the price is set [by LCBO], but I promote the fact that I have a particular craft beer,” he says. “We have a large selection of Ontario craft beer and I like dealing with the craft people … I think as an independent grocer, our natural allies are the craft brewers. They’re very much like us.”

Building relationships with suppliers—large and small—is a key part of building an effective merchandising program. MacGregor says beer company partners are in a great position to give advice on what will work for a particular grocer. “That opportunity is largely still untapped,” she says. “People in the beverage alcohol trade have deep knowledge about merchandising and have a lot of experience dealing with LCBO. They could be a huge resource for a grocer looking to set up a really well-organized and exciting beverage alcohol section.”

One of Simmons’ merchandising tips is to have shelf signage and clearly delineated categories of beer. “Grocers can subset them into [categories] like lager, pilsner, ale, porter, stout … and create some impactful point-of-purchase materials for consumers,” he says.

While grocers can certainly find ways to drive beer sales within the current rules, Vince’s Trimarchi is still hopeful that one day, some of the restrictions will be lifted. “I think that’s about showing that grocers are responsible, are capable of being good sellers, and are upholding the rules, which I think we have done,” he says. “And if we can show that, we can be given a bit more room.”

This article appeared in Canadian Grocer’s March/April 2018 issue.

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