Recent disruption in brand and subcategory dynamics within the beer category has placed a bigger spotlight on the importance of up-to-date shelf sets. As a result, convenience retailers are focusing on their assortment and space allocations within cold boxes to ensure offerings reflect current consumer demand and brand trends.
To help determine the right reset for smaller retail formats like convenience stores, some beer suppliers are encouraging c-store operators to look ahead for projected trends.
“We view the cooler as our most important reset of the year,” remarked Eric Patterson, chief merchandising and marketing officer at Beacon & Bridge Market, which operates about two dozen c-stores in Michigan. The chain implements a cooler reset every spring, with “minor tweaks” made in the fall. “With the cold box accounting for 36% of our business, the cooler reset is at the top of our priority list every year,” he said.
Other leading c-stores and beer suppliers confirm that with a reshuffling among major beer brands this year, along with subcategory shifts, many beer coolers are being “tweaked,” and more substantial changes are likely for spring resets.
“Every year we do two resets in beer—a larger spring assortment review and a mid-to-minor tweak in the fall,” said Jon Manuyag, director of marketing at Oregon’s Plaid Pantry, with 107 stores. “The fall reset is typically used as an indicator of how new packages that were introduced in the spring are performing and if they warrant an expansion.”
Similarly, California’s Rotten Robbie chain implements a “semi reset” in the fall and a major cooler realignment in the first quarter, according to Jodi Leibowitz, category manager. Adjustments made in the autumn typically include “bringing in more flavors, such as seasonal craft brews,” she explained.
Patterson also makes room for new “ancillary” brands as part of Beacon & Bridge’s fall pull-and-plug reset, such as the recent addition of beers from Ohio craft brewery Rhinegeist. “I prefer to wait until after the NACS Show to identify our focus items for the spring reset,” he explained. “We start planning our spring reset in November.”
Charlie Trepcos, executive sales director at D.G. Yuengling & Son brewery, said that because cooler resets require a lot of manpower to plan and implement, most c-stores will reserve the practice for next spring, just before the big beer sales season, while any recent fall tweaks were made to ensure that stores have “enough supply of the brands that are growing and to address some of the challenges of other brands.”
David Garcia, national accounts vice president, convenience, at Molson Coors Beverage Co., added, “It’s imperative that spring 2024 resets address the latest trends to ensure we’re ready to maximize category performance next summer.”
Space Right-Sizing
Stop & Go, with 66 stores in Ohio and Michigan, revises its beer sets in both the spring and fall. This year’s fall reset, implemented in September, was a four-week process, according to Neal Frandsen, vice president of marketing. Among the changes put in place was increased space for the surging Modelo Especial brand.
“I believe it will be our strongest fall in the last five years,” Frandsen said in early September. “We’re now stocking a fuller line of products while similar in pricing to grocery.”
Beer suppliers note that regular cold box resets go a long way in helping retailers react to changing consumer demands and ultimately drive larger purchases. “One of the main benefits is avoiding out of stock on brands by ensuring that there’s enough supply to cover delivery and service schedules,” remarked George Ward, national director, off-premise, e-commerce, and category/shopper insights at Boston Beer Co.
Retailers today are constantly having to put the pieces of a jigsaw puzzle together.”
Darryl Koenig, director of national accounts at Yuengling, added that the biggest goal of a reset is to “right size the space based on the current performances of the marketplace so that retailers have the right availability of in-stock products. A c-store has a limited amount of space, so operators must ensure they have the right assortment and the right pack out.”
But Koenig concedes that beer resets can be tricky for c-stores, particularly these days when trends change at a frenzied pace. “The challenge is to always look at what’s coming so you’re ahead of it,” he explained. “If you only do resets once a year, you have to meet consumers where they’re headed. But if you’re only setting your shelves based on last summer’s trends, you’re meeting them where they were.”
In recent years, for example, some retailers over-indexed on subcategories like craft beer and hard seltzers, only to find that high demand for the products one year was followed by a softening the next.
New No. 1
This year Modelo emerged as the top-selling beer in the United States, and retailers are making more space for the Mexican brew. Bill Newlands, CEO of importer Constellation Brands, told beverage analysts in October that the company expects to see “a strong [spring] reset period. Retailers recognize where the growth and velocity are coming from and that will work strongly to our advantage as those resets occur.”
Jenny Odom, vice president, national accounts, at Constellation, added that Modelo “has shown impressive double-digit growth for 38 years,” and is the top c-store brand.
Beer singles, a key traffic and profit driver for c-stores, should also figure largely in cold box resets. Singles deliver some 67% of beer unit sales in c-stores, according to Molson Coors’ Garcia, and 27% of the dollar sales. “Allocating about 34% of space to singles will maximize category performance,” he noted, while assortment must be balanced across subcategories.
Bump Williams, president and CEO of Bump Williams Consulting, which advises suppliers, wholesalers and retailers, agreed, noting that “single-serve profit margins are a lot higher than multipacks.”
Make Room for New Players
In recent years, beer alternatives such as hard seltzers have carved out space in c-store coolers, and retailers report that like beer, sales velocity and trends for those products need to be monitored and space adjusted accordingly.
“Seltzer space continues to right size and brands outside of White Claw and Truly are being looked at for space performance to make room for other growing categories,” said Manuyag. He pointed to a “big surge” in flavored malt beverages of late, including the entry of “hard” versions of non-alcoholic beverages such as Mountain Dew, Arizona iced tea and Monster.
Frandsen and Patterson both reported that their stores have cut in more space for spirits-based RTDs. But already at Beacon & Bridge, “We’ve found that a couple of brands are the clear winners,” Patterson said, adding that the chain will likely cut back on some offerings in 2024.
Allocating about 34% of space to singles will maximize category performance.”
Still, c-stores must highlight new innovation and brands in the beer space. “Retailers today are constantly having to put the pieces of a jigsaw puzzle together,” remarked Yuengling’s Trepcos. “A reset gives them the opportunity to address new items and segments.”
While Garcia concedes that a high failure rate often comes with innovation, he said the right new products can help deliver category growth.
To test new products, Stop & Go gives each of its beer distributors eight feet of warm beer space in each store to use as a “playground for innovation,” Frandsen reported. After six months, brands that perform well often win a spot in the cold box.
Follow the Data
Whether it’s new brands or old standbys, beer offerings must be actively monitored to ensure they deserve space in the cooler, suppliers and experts said.
“Don’t get complacent and stay with what worked last year because the landscape has most definitely changed,” remarked Williams. He and Garcia advise c-stores to rely on sales data for recent and emerging trends to warrant the appropriate inventory, reduce out of stocks and drive overall beer sales.
“We encourage retailers to focus on what is driving volume and category growth in their stores, build holding power for high-growth brands and offer the right selection to meet evolving consumer needs,” added Odom.
Trepcos couldn’t agree more. “We’ve never seen such changes in the beer business as we’re seeing now,” he said. “Retailers have to be cognizant of those changes.”