Share:

Brewing up business

Through smart merchandising and the right assortment, grocers can boost their beer, cider and “near beer” sales

Shutterstock/Thana ThanadechakuShutterstock/Thana Thanadechaku

As provincial liquor boards continue to open up the sale of alcohol, consumers are enjoying the convenience of picking up their favourite tipple while they shop for food. Beer and cider are available at licensed grocers in a growing number of provinces (most recently New Brunswick) and brisk sales show consumers are indeed regularly adding alcohol to their shopping baskets.

In fact, grocery is becoming an important sales channel for many beer and cider breweries, especially independents. “Grocery is about 8% of our business overall, and growing rapidly,” says Jim Manz, vice-president, sales and key accounts for Ontario’s Waterloo Brewing. He says Waterloo’s “portfolio grew overall in grocery by 60% in 2019.”

But while grocers are seeing strong beer sales, they’re also still figuring out how to maximize profits. “It’s a difficult issue,” says Espo Ariganello, store manager of one of Starsky Fine Foods’ three Ontario locations. “It’s expensive to carry beer due to the licensing fee and the labour costs—the certifications needed for staff, especially with staff turnover— so that cost burden, plus thefts and accidents, sometimes outweigh the benefits. We carry it for the convenience of our customers. It’s something that you have to bite the bullet on.”

Although he says restrictions around sales make marketing a challenge, offering customers the right mix is essential. “Our thinking is that if you do carry beer, it has to be well presented, it can’t be a shambles.” Starsky’s carries a lot of European beers, reflecting customers’ preferences, and Ariganello says selection is currently “at a comfortable level.”

“It’s really about managing your inventory, making sure you’ve got your best-selling brands, and then managing their assortment,” agrees Manz. He also suggests arranging products by brewer rather than flavour, noting that brand-loyal customers will look for the brewer first and the type of beer second.

More beer is sold in Canada than any other alcoholic beverage—but while annual average beer sales growth was just 1% in 2018 according to Statistics Canada, sales of ciders, coolers and other refreshment beverages grew by 7.2%.

“While beer isn’t going away, younger consumers show clear interest in new and different formats of alcoholic beverages,” says Joel Gregoire, Mintel’s associate director of food & drink, Canada. In addition, consumers aged 20 to 24 are more likely to agree that “beer’s flavour is too bitter,” according to Mintel’s Beer, Craft Beer and Ciders—Canada, February 2017 report.

Fruit-flavoured beer and radlers (beer blended with juice) are among some of the notable current beer trends, says Gregoire, especially among consumers aged 20 to 34, a group also more likely to drink cider.

Manz says his company’s Seagram Cider did well at Liquor Control Board of Ontario (LCBO) outlets in 2019, and notes it will be a growing focus for grocery. “It’s got a great flavour profile—it’s all natural, gluten free, and made with Ontario apples—and we’re committed to working on innovation.” Waterloo Brewery also recently added a pineapple flavour to its popular line of 2.5-alc./vol. radlers made with real fruit juice such as grapefruit and raspberry, and is test marketing a strawberry rhubarb flavour. “Beverages that are lower alcohol and lower calories are certainly dominating the scene at the moment,” Manz says. He predicts we’ll see more innovation in the space, as well as lower-alcohol, lower-sugar cider.

Mintel data shows “38% of Canadians claim they typically drink low-alcoholic beer, which rises to 48% among 20 to 34 year olds.” Healthier lifestyles, the keto diet, and alternatives like cannabis are just a few reasons consumers are looking for lower-alcohol, lower-calorie options. And, says Gregoire, “there’s a general consensus in the industry that younger consumers are drinking less alcohol.”

Ted Fleming, owner and CEO of Partake Brewing, says his non-alcoholic beer brand has captured a much younger audience than he originally expected. Younger millennials, he says, “are saying we can make up our own minds about what is fun and socially acceptable.” Fleming expects over half of Partake’s sales in 2020 will be through grocery, as the brand continues to be picked up by the major banners.

For grocers, one big upside of non-alcoholic beer is that it can be sold in every province. And because there are no rules around merchandising, grocers can get more creative with displays, offer samples, and cross-merchandise with other departments. Partake offers four varieties (each 10 calories per can), and this fall will offer its Red variety to grocery. Fleming says the company will launch a radler and a gose (a light, sour beer) just in time for summer merchandising. “We’re now working with grocers on activities, like an outside beer garden, that highlight the fact that not only does our product taste great, but you can have Partake in situations where you can’t, or don’t want to, have alcohol.”

Share: