by Tom McCormick

As in the distribution tier, retailers continue to consolidate, but opportunities exist for small brewers who are in tune to the evolving needs of the retailer and consumer. At the annual Brewers Association of America conference held earlier this month in Seattle, various speakers discussed retail trends and suggested ways that specialty beers can penetrate the highly competitive retail environment.

There is no doubt the big grocery retailers are getting bigger. Tom Fox, partner at CM Profit Group, a retail sales and category management company for the beverage industry, said that five years ago the top 5 retailers in the country accounted for 20% of sales. Today, that number is double. Fox said, "Retailers are becoming far more sophisticated in data analysis and experts in business data." But he pointed out that this can provide opportunity for smart craft beer sales reps. Although retail beer buyers now better understand the "what and why of what is going on in their store, they can't be experts at every level." Buyers are looking for small brewers who can provide objective advice about the category. Fox noted five things retailers are always looking for in any brand:

• Increased category sales and profit
• Increased store traffic
• Increased dollar ring
• Enhanced store image
• Increased excitement.

Specialty beer can provide all of these, especially if programming and product support are correctly executed to increase sell-through of a SKU. Fox also suggested that an understanding of the retail business is essential. "Ask good questions, have good data, offer executable solutions and have category knowledge." Another key point that Fox emphasized is "to have good analytical capabilities - not just what is going on, but why. Know your sales, share, profit and margin. And provide post-program analysis," advised Fox. Retailers like to have objective analysis and don't mind hearing a supplier saying something along the lines of "I've looked at the numbers and here is what I suggest."

On-premise, hit hard by the post 9/11 slowdown and a sluggish economy may also be offering a glimmer of hope to small brewers. Michele Schmal, vice-president of Client Development at NPDFoodworld, discussed the trends in the on-premise business, which was mostly fact and figures, but those statistics point to areas that beer may gain on wine and spirits. For example, people are spending down - but still spending. Dinner business is down, but appetizer business is up. And "family dining" venues are stronger than upscale. Both circumstances are more conducive to a beer versus a bottle of wine. Small brewers can follow these trends and focus programming and placements accordingly.

In a panel of two chain store beer buyers, some interesting ideas were given for category success in mass-market stores. Moderated by Jim Koch, founder of Boston Beer Company, the panelists were Joe Miglino from Larry's Markets, based in Seattle and Ed Cook from Harris Teeter's, a chain of 145 grocery stores based in North Carolina. In answering the question from Koch, "what should small brewers be doing over the next five years," Cook said "provide a point of differentiation, variety and quality. Going down the road, the industry must continue to support itself. Promote the segment to maintain a difference." Miglino continued along that same line saying, "Education must continue. Continue to teach retailers with beer seminars and tastings." For small brewers to exert influence, Miglino said breweries must "support their brand in the marketplace and participate in local events. Driving customer interest is very important." Cook concurred by adding "building on-premise business helps the staying power for a SKU." Both buyers said that, as busy as they are, seeing a brewery rep on a regular basis is important. "I like to see suppliers, the smaller guys, a couple of times a year. They teach me. And bring samples!" Miglino said more serious than in humor.

The primary message throughout was that, even amongst the huge influence the major brands exert and the noise and excitement of malternative, the "better beer" category brings value to the retailer in a variety of important ways. As tough as it is to compete within the confines of limited shelf space, small brewers must have an intimate knowledge of the retail trade as it too evolves and changes. It is critically important to have a keen eye on what retailers are looking for and use that information when making the sales call. This applies to on-premise, small independents and mass market chain stores. As large chain stores lose major brand sales to mega-stores such as Wal-Mart, now diversifying into the grocery business, small brewers may actually begin to see a warmer embrace from these traditionally tough, but high volume stores. Successful small brewers will seek and find that silver lining.