Beer sales far from ailing

Drug Store News, May 1, 1995

In general, sales of spirits are trending down while beer and wine sales are growing. One chain buyer noted a decrease in spirit sales almost identical to the increase in beer and wine, though he stressed this does not necessarily indicate a conscious shift from one to the other. "They are different customer groups," he said.

Consumers show great interest in new products--witness the success of microbrews and unique products such as Adolph Coors Co.'s Zima clear malt beverage--and they're willing to pay more for premium products.

"The shift toward premium-priced products reverses the trend toward lower-priced beer we saw from 1988 to 1992," said Mike Beckman, director of segment marketing for Anheuser-Busch (A-B). "The continued growth of Bud Lite and specialty beer has helped fuel the change. In addition, age demographics have been favorable to the beer industry. Children of baby boomers have now reached the minimum age group, and they are buying premium beer."

Mike Hennick, a Miller Brewing Co. spokesman, agreed. "Trends are similar in drug stores and convenience stores," he said. "Consumers are trading up to premium brands." In 1994, Miller introduced Red Dog premium lager, with "more bite" than traditional beers.

Hennick estimated that ice beer, introduced about two years ago, now accounts for 6 percent to 8 percent of the beer market. Miller markets Ice House. A-B markets Ice Draft. This year, Coors joined them with Coors Arctic Ice.

Beckman added that 12 packs and 24-can "suitcases" show strong growth, due in part to drug stores' aggressive promotion. "Beer is a destination purchase, so there's good reason for drug stores to give adequate space to core products," he said, noting that drug stores are capturing female customers with key price points on core items.

The flood of specialty brews continues. A-B rolled out Elk Mountain-brand Amber Ale and Red Lager nationally in December, and is now test marketing Crossroads wheat beer. Many, such as Coors' George Killian's Irish Brown Ale are sold in 22-ounce "trial" bottles--a sampler without the expense of a six-pack.

In the wine trade, Bob Ring, national accounts manager for Banfi Vintners, has seen healthy sales growth in imported varietal wines, such as Merlot, and larger bottles of better-quality wines. "We're doing very well with bag-in-a-box products, and there has been a shift from 750-milliliter to 1.5-liter bottles," he said. In response to the trend, Banfi now offers a 1.5-liter bottle of Placido Pinot Grigio.

He has also seen drug store liquor departments moving toward a cleaner look, using fewer point-of-sale materials and striving for a consistent appearance chain-wide. "What they do use is customized to their stores," he added.