Beer suppliers of course want to help increase the flow of information to food-and-beverage operators through category management; it may be a godawful pun, but the image highlights some of the state-of-the-art techniques in place in the beer industry.
Indeed, major operators are increasingly coming to expect and depend upon a variety of types of information from American beer giants like Anheuser-Busch, Inc., Miller Brewing Co. and Coors, and they’re seldom disappointed. Suppliers are helping provide new information and perspectives that help shed light on what customers in specific locales want and will buy.
Beer is “probably the one category in which we use [category management-type] information the most,” says Rachel Antalek, beverage director for Darden Restaurants’ Red Lobster chain.
“If you think about wine and spirits, there are so many things that make choices unique to your brand that sometimes the category information, while it’s helpful, doesn’t always address the concerns and considerations of your brand image,” she explains.
On the beer side, however, the category “tends to be a lot smaller when you look at number of choices and offerings in the mainstream. It’s just a little bit easier to apply more of the discipline and more of the financials to making your decision. You’re not worrying about, in the chardonnay world, (the fact that) there are 15 or 25 different chardonays in a certain price point that you could look at.”
Jim Barnett, beverage manager for Metromedia Restaurant Group’s Bennigan’s Grille & Tavern, Plano, TX, says beer suppliers’ category management efforts are always welcome despite the fact that “we’re pretty good at it ourselves.
“Maybe we’re a little bit different from the rest of the pack in the sense that last year we went through a pretty dramatic SKU reduction,” he explains. “We thought that our inventory dollar on hand was a little bit higher than we like to see it.”
According to Gary Goldstein, vice-president, on-premise sales for Anheuser-Busch, Inc. in St. Louis, MO, A-B offers its retailers tailored category management solutions designed to drive profitable business performance.
“Our process includes analysis that features on-premise industry, segment, and market trends; consumer insights, strategic planning; and targeted business development programs,” Goldstein notes. “We enjoy the opportunity to work with numerous restaurants and bars throughout the country, and believe that we help each retailer find what best fits the needs of their consumers to gain a competitive advantage and achieve their business goals.”
Miller Brewing Co., Milwaukee, WI, part of SABMiller, offers restaurant and bar operators an insight into its category management program on its web site. As the site notes, “Our time-tested approach to beer category management ensures maximum sales and profits.”
Such an approach, Miller claims, helps operators effectively manage their beer sales by developing:
A clear understanding of beer consumers and their habits;
A mission and strategy for your business;
A definition of the role for beer within your business;
An assessment of the performance of your beer category;
Strategies that will positively impact beer assortment, mix and space; local marketing, pricing, promotions and staff training; and service from your beer suppliers.
“What we do from an on-premise category management standpoint is really, first of all, assess their business,” notes Phil Blavat, director national on-premise accounts for Miller. “When our national account managers go in there, they’re constantly assessing how the business is doing. Who is their consumer? What’s the best package? What’s the growing segment? We can give them all of that information. We know what our numbers are, and sometimes we’ll ever share the competitive numbers, depending on the account.”
Among the questions proper category management techniques will answer, according to Miller, are these:
Is beer under-performing or over-performing versus the local market?
Is the beer assortment/mix consistent with local and national averages?
Which beer price segments are under-performing or over-performing?
Is beer contributing adequate profit as opposed to other product categories?
Is the beer category properly priced for maximum profits?
Does your beer strategy meet the needs of your consumers?
More information available at www.milleradantage.com
MOST USED INFORMATION
Using the information depends on your program. Orlando, FL-based Red Lobster’s management designates 10 beer choices that it believes make sense for all 672 units nationwide. From there, it permits units to choose up to 15 bottles that suit their particular clientele.
Says Antalek, “More than that and we feel like we start to compromise the quality of the beer that we serve. For those remaining bottles it really turns into a regional exercise.” Thus, asking suppliers for information like brand rankings by market helps executives offer better options to their restaurants.
Red Lobster looks at a lot of regional statistics, including those from Nielsen, and a lot of consumer data about the demographics behind individual brands. “That way,” says Antalek, “if we have a restaurant that is in a college area, their choices might be very different from one five miles down the road in more of a suburban market.”
“What happens in the Midwest is very different from what happens in Florida,” Miller’s Blavat agrees. “Certain states are much more draft oriented; for example, Pennsylvania. We’ve been showing (operators) how important draft is to them. Sometimes they don’t realize that, especially some of these bigger chains.”
Antalek says she and her colleagues are “fairly in tune to what (suppliers are) capable of” in the way of statistical insights. “It’s not usually that they’re banging down our door to come give it to us; it’s usually the other way around. We know what they can do. When we have a project we take the information out to them and say, ‘Here’s what we need back; can you turn this around?'”
She acknowledges that, across the board, category management services today are superior to those of even five years ago. Indeed, she was serving at Olive Garden four years ago when the chain began implementing category management. “At that point there was only one of the major suppliers who was capable of helping us to the extent we needed,” she recalls. “All of a sudden now everybody’s got the capabilities.”
While category management is clearly a great tool for chain and brewery alike,” Antalek concludes, “where we could use more help from the beer industry in total is for them to take that discipline and apply it against what they could be doing to grow the total beer business in the broad market. They do great things to help us with or individual businesses, but I would like to see the beer industry really taking some ownership to get that category moving again. The beer industry been flat for the last four or five years now.”
Bennigan’s did its own internal data analysis which showed that the “vast majority” of sales came from just 20 of the 31 beers it stocked. In fact, the top four sellers Bud Light, Miller Lite, Coors Light and Budweiser accounted for 43.5% of beer sales. The top 10 sellers provided 69.7% of sales, and the top 16 for 81.5%. As a result of the analysis, 11 labels were removed from restaurants in the 30-plus states in which the chain operates.
VOLUME SPEAKS VOLUMES
“Our own category management helped us determine that outside of the top 16, the volume didn’t really support” stocking them, Barnett notes. “It doesn’t really make financial sense to carry all those products when you’re talking about your inventory dollars on hand.”
The big three beer companies, Budweiser, Miller and Coors, bring Bennigan’s management IRI and Nielsen
statistics by DMA. That information, says Barnett, helps executives make better decisions. “Sam Adams Light launched in the Northeast, so it’s obviously going to perform extremely well there. Is it going to behoove us to use it in Texas? In this case, it is; it’s performing rather well for us in Texas.”
The geographical statistical breakdowns and updates “truly helps us understand what products the consumer is going out and picking up off the shelves when they’re buying their own six pack to take home,” he notes, “and we want to make sure we have those products readily available to them in our restaurant.” Bennigan’s own research is internal, while the suppliers’ is national.
As Bennigan’s brain trust began to prioritize brands and design strategies last year, when it was reducing beer SKU, it became “important for us to understand exactly which products we wanted to carry and which ones we didn’t,” notes Barnett. “We wanted to make the best use of the products that were in our building.”
As for the statistical skills of the beer suppliers, he adds, “some area little better than others, but the general gist of it all is the same.”
Those who do a better job overlap their own category analysis nationally with Bennigan’s internal snapshot. Such an overlay, says Barnett, “digs a little bit deeper into it so that we know not only the beer category as a whole, but then can subdivide the category into the little categories they each hold Premium, Domestic, Import, Domestic Light, Malternatives and others.”
On occasion, Barnett concedes, there may be a difference between what suppliers promise and what they deliver. “All of them claim to have access to IRI and Nielsen, which is very important to us. That tells you what ‘Joe Smith’ is picking off the Albertson’s shelf when he goes out to buy his own six pack on a Friday afternoon.”
However, he has found, “that data sometimes can be manipulated. Why do I ask more than one company for the category analysis review? I want to see what Budweiser said their products are going. I want to see what Miller said their products are doing. And then I want to see what Miller said Budweiser’s product was doing, and vice versa just to keep them honest. A lot of times somebody may tell you, ‘We have access to this or access to that, and we pick it apart this way,’ and then it doesn’t always come in that way.”
The next few years should see “more sophisticated data” available to operators, according to Phil Blavat, director national on-premise accounts for Miller. The company already subscribes not only to ACNielsen, which tracks off-premise sales, but has the Miller Behavioral Tracking Systems, or BTS, a database that “will tell you exactly what consumers are choosing when they are going into the on-premise. It’s based on consumer surveys and is something that has been very effective.”
Bennigan’s wants to enhance its partnership with beer suppliers by timing systemwide promotions to align with national programs.
“We’re trying to overlap our promotional efforts with the times when they are putting their big dollars forth with theirs,” says Jim Barnett, beverage manager for Metromedia
Restaurant Group’s Bennigan’s Grille & Tavern, Plano, TX. “It makes sense: if Sam Adams Light is doing a big promotion in the Northeast market, well, boy, that’s the time I certainly want to partner up with them in my Northeast stores (because) they’re going to have more focused effort against it. I’m talking about that alignment from the company all the way down through to their distributorship. Now they’re really focusing on it because they’ve got their dollars invested in it from March to May.”
Among the factoids Bennigan’s officials would like to know: the size of the promotional budget behind a specific brand; which markets the promotions will focus on, and when; and which vehicles (billboards, radio, television, industry publications) will be used.
“It just behooves us, from a strategy standpoint, to understand where and when they’re going to put the most effort so we can overlap that effort,” he notes.
Barnett adds that he would like to see his distributors play a larger role in category management efforts, and for a very sound reason.
“It’s the distributors ultimately whom I deal with more times than not. I can talk to my national account rep and set up promotions and events, but especially as it pertains to Budweiser, Coors and Miller, the big three, we don’t do too much from a national perspective. We ask them to do that regionally with our regional vice presidents. So more times than not, a regional vice president is in the ear of his local distributor to set some sort of a program up with them.”
But communication between all parties is already pretty good, and getting better — as is the quality of the information they’re communicating. The vision provided by sharing of information — by category management — grows sharper.