Posted on | August 2, 2013
Written by | Paul Santelle
At the July annual meeting of the Beer Institute of America, the American Beverage Licensees (ABL) was invited to talk about big beer from an independent retailer perspective. As a newly elected Vice-President of the ABL, I offered the following breakdown of how globalization, nationalization and consolidation of the U.S. beer market has led to a dramatic change in the role big beer plays in the independent retail model.
There is little doubt that the acceleration of retail beer price increases, in recent years for all beer categories, in comparison to price stability for other alcoholic beverage categories, has compromised consumer confidence in the beer category. This has caused confusion on the part of consumers, in terms of finding the best value for their ever dwindling disposable dollar.
In layman’s terms, the 2008 economic downturn has resulted in a migration from the once-perceived value of malt beverages as the first preference for new consumers coming of legal age. Millennials have been chased away by the higher cost of beer while being lured toward the perceived value of spirit categories, like vodka, that have maintained stability and continuity in pricing.
For the first time since the deregulation of our industry in the early 1980s, first-time alcohol purchasers are skipping over beer and considering wines and spirits. It is more than likely that simple economics may be the driving force behind this transition as the entry-level value of beer has been diluted by year after year price increases.
The price gap between a Popular, Premium or Imported case of beer is now less that the weighted average of a six-pack. Take it a step further: Consider that the average price of a case of beer is about the same as the average price of a 1.5L of vodka that will generate an average of 30 alcohol-based beverages, in variety of mixed drink choices.
Combine all of the above and you end up with an independent retailer that has been marginalized by a diminishing ROI for every case of big beer sold from the course currently navigated by “global” market forces. However, on the positive side, some new big beer line extensions and new product innovations in the seasonal and cider categories have created opportunities for profits through quality sales.
Our advice: keep marketing simple, keep packaging simple and keep pricing simple. Many of our experienced independent retailers still believe that the beer business is basically a simple business that should be kept fundamentally simple to regain the consumer confidence that has been waning in recent years. Big beer producers must keep in mind that other industry segments offer simple and more limited-size assortments for consumers to compare to all other competitive choices within the same category, as well as to compare to other competing industry segments when crossing over alcohol categories.
Your Support NOW Can Make the Difference!
The NJLSA is working with key members of our Legislature this summer to move a much needed piece of legislation through our State Senate with the support leadership. There has probably never been a more important time for all of our State’s independent retail licenses to step up and support our efforts! Your joining the NJLSA, taking meetings and/or making calls to Legislators in your districts will help ensure the survival of your livelihood.
If you are concerned about the future of your business as well as the stability of our regulated marketplace and you have been waiting on the sidelines for the right time to jump in, NOW IS THE TIME! Our “Level Playing Field Legislation” will ensure a marketplace that is fair, balanced and, most importantly, not stacked in the favor of big box retailers looking to use alcohol purely as a loss leader to subsidize their primary business model.
Annual Fall HOLIDAY TRADE SHOW is Teed Up!
Please make sure to mark your calendars by circling Wednesday, October 30th, the date of the 8th Annual NJLSA Fall Holiday Trade Show. It will once again take place at the New Jersey Convention & Expo Center, Raritan Center in Edison. This is the largest trade show of its kind and the one show you do not want to miss!
Please go to our website for more information and if you are a vendor, supplier or wholesaler we urge you to get registered as early as possible; we have SOLD OUT this show for three consecutive years and had to turn away quite a few latecomers last year.