Top brands and proven profitability - the Miller advantage

Drug Store News, Sept 6, 1993

Few product lines can match beer for its ability to generate high-ring transactions or impulse sales from well-merchandised coolers and displays. With limited cooler space and fierce competition from other channels, effective shelf management for beer is vital to success in drug stores. "Yet many stores still devote as much as half their space to items that account for less than 10% of the category's sales", says Chris Moore, Miller Brewing Company's Vice President of National Retail Sales. In order to capitalize on the power of the beer category, according to Moore, drugstore retailers must be able to tailor their product mix and shelf space to meet customer needs in different markets and store formats. To do that well, they need to make good use of sales, movement, and profit information.

Miller Brewing, the makers of top-selling brands like Miller Lite, Miller Genuine Draft, Miller Reserve, and Sharp's, helps its retailing partners do just that with their exclusive "The Arrangement" Price Level Merchandising system. More than just a shelf management program, the Arrangement is a complete merchandising philosophy that offers a proven, effective approach to beer planogramming. With the Arrangement system, Miller makes use of financial and inventory analysis to ensure maximum sales and profits, as well as full-color schematics or photographs to assist in setting shelves and maintaining cooler displays.

With the Arrangement system, the total category is organized by price segment in the direction of traffic flow, so that imports, super-premium, and premium segments are shopped first, followed by the popular and budget brands. Space is then allocated according to each item's contribution to category sales and profits. Products are arranged vertically by brand and horizontally by package. "With this plan, the cooler is more organized," adds Moore. "Both over-stocks and under-stocks are minimized, and customers can find their preferred brands easily." More importantly, arranging products by price segment increases the likelihood that customers will buy higher priced, higher profit items instead of trading down.

With out-of-stocks minimized and more productive brands in the mix, drugstores are able to get the highest return on every valuable inventory dollar. In one recent study, test stores using the Arrangement system increased 10.8 percentage points in unit sales, 11 percentage points in dollar sales, and 12.8 percentage points in gross profit over stores that organized products by brewer. In fact, the projected annual increase in gross profit dollars was close to $4,500 per store.

Of course, a comprehensive approach to shelf management works even better when retailers carry the right balance of growing brands with strong consumer appeal in each price category. Miller offers the Miller Reserve and Lowenbrau families in the superpremium segment, top selling Miller Lite, Miller Genuine Draft, and Miller Genuine Draft Light in the premium segment, Miller High Life in the near-premium segment, and Milwaukee's Best and Meister Brau in the below premium segment. Miller rounds out the product line with nonalcoholic Sharp's as well as Magnum malt liquor. Plus, Miller has recently introduced Miller Reserve Amber Ale, an all-barley ale aimed at the super-premium segment, and Miller Clear, an exciting new premium beer that offers full taste without heaviness.

Miller's total category management focus, exciting new products, and powerhouse brands make an impressive total package for drugstores. "We want our retail partners to know that they have the expertise and resources of the Miller Brewing Company behind them," says Moore. "It just doesn't make sense to look anywhere else."