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The explosion of craft has left retailers grappling with two very different types of product in the beer and cider category. On the one hand, there is the small batch, fast-moving world of craft beer. On the other, there are the big brand names that form the core of any convenience store’s offering. Toby Hill asks expert retailers and suppliers how to maximise profits on each side
Supermarkets entering the fray One of the challenges for us is that when we started, craft beer gave us a point of difference, but now the multiples have got on the bandwagon, which has really re-shaped the market. As a result, a lot of the craft beers now available in supermarkets aren’t right for us anymore, as people can buy them as part of the weekly shop – and we can’t compete on price.
Move to small batch and limited edition Instead, we focus on the products supermarkets can’t buy, because it’s small batch or limited edition. That end of the market moves so quickly that the supermarket supply chain can’t adapt to it. By focusing on those beers, we can maintain our unique selling point.
Trends among craft lovers There are always certain beers that are trendy. Right now, everyone is raving about Verdant – it’s like gold dust and people are looking for anything they bring out. Breweries like Cloud Water and Northern Monk are very popular, too.
In the past year, we’ve also seen more craft breweries doing collaborations with each other, which are popular with customers.
Find resources to stay informed Trends move quickly in craft beer and it’s vital to stay informed of popular new products. To do that, I follow the UK Craft Beer Forum on Facebook as well as lots of other craft beer-themed Facebook groups to see what’s trendy. Now my newsfeed is full of craft beer news, so it’s quite easy to keep up to date.
Keep promiscuous customers satisfied It’s vital to remember that the way a craft beer customer shops is very different to someone buying mainstream lagers. They’re much more promiscuous – it’s not just a case of grabbing two four-packs of Foster’s; they’re going to want to try several different things, selecting across the bay. So it’s important to keep a broad range.
Work with a specialist wholesaler As a result, it’s vital to establish a good relationship with a wholesaler. I’m lucky to work with Beer Paradise, based in Leeds. We got in contact with them eight years ago, off the back of seeing another retailer’s work with them. They send us weekly email updates; they let us do single pick on the beers, with only a small premium; and they’ll put aside cans for me if there’s a sought-after beer such as a new Verdant product that’s come out.
Craft beer is worth more than £150m as a category and it will reach £255m in the next two years. With the average craft beer price per litre of £4.46 – almost double that of the beer market as a whole – it is a major opportunity for our retailers to increase premium sales. At Costcutter, we’ve partnered with online beer distributor EeBria Trade and introduced more than 80 craft breweries to our retailers. This allows them to buy hundreds of products online, which are delivered directly from local breweries to store.
Pint cans I’ve found that pint cans of lager in brands like Carling and Stella have become much more competitive on price, and that’s made a big difference to how they sell. We now sell four-pack pint cans of Budweiser at £5.50 all year round, for example, and they fly off the shelf.
Value brands in lager Our customers are really looking for value in their lager purchases these days. For example, our biggest-selling lager might be quite surprising: Skol. We go through 35 to 40 cases of the eight-packs a week. We sell it at £7.49, which is a pound lower than the RRP but it still provides a 50% margin, so it’s a great product for us. This is largely a result of our relationship with Go Local.
Bottled brands in cider I’ve definitely noticed that, in terms of ciders, people are dropping off buying cans of Strongbow and upgrading to bottles. Flavoured ciders have, of course, been a trend for a few years, which is why we’re seeing companies investing more. But increasingly I see people buying a single bottle rather than a pack of cans, which is obviously excellent for me and my margins.
Match your business model to the right symbol group and wholesaler We’re now with Go Local, and we’re thriving as a result. I know that for lots of businesses – especially down south – there are great opportunities in fresh and chilled, and food to go. But they’re not key drivers of sales for me, whereas Go Local and Parfetts are pushing precisely the categories that matter for us. They have lots of fantastic promotions on mainstream beers and lagers, for example.
Prime site four-packs in the chiller You’ve got to cater for all and we have the box packs prominently displayed, and they offer the best value: 12-pack Carling is £10 year-round, for example; 10-pack Foster’s is £12. On promotion they can come down to £8.50 or £9. But the four-pack provides a much better margin and you don’t want too many people upgrading to the box pack. You won’t make more than 15% on that, whereas you can easily make 25% on the four-pack.
Box clever when purchasing There are always promotions on mainstream beer and cider lines, so it’s worth looking for the cheapest option at any one time.
On brands such as Carling, Foster’s and Budweiser, you can get great deals and if you pass them on to your customers, you can build a reputation for a good-value place to shop.
It’s vital to be aware of the changes going on in cider and stock products that people want to buy. We are continuing to see a major move towards more premium products. Consumers are prepared to spend more to enjoy a high-quality, premium cider that demonstrates heritage and provenance. As a result, retailers should think about extending their bottled range to complement the multipacks of cans. A range of premium bottles will meet the needs of customers who are looking for experimentation and trial.
Key beer and cider products
As once booze-swilling Brits move towards moderation, AB InBev is aiming to meet demand for light beers with its new Michelob Ultra, brewed at 3.5% and with 79 calories per 355ml can.
Cider is also moving towards moderation, and Somerset-based manufacturer Sheppy’s has responded with its Low Alcohol Classic Cider, at 0.5% ABV.
Free-from trends are also reshaping the drinks market, and AB InBev is getting ahead of the curve with Stella Artois Gluten Free beer.
Traditional British ale manufacturer Joshua Tetley & Son is launching its first range of bottled ales in four years, with Tetley’s No.3 Pale Ale available alongside Tetley’s Golden Ale in 500ml bottles.
With cider drinkers thirsty for innovation, Thatchers Rosé is adding a splash of colour using Pink Lady, Fuji and Gala apples, sold in both a 4x440ml can pack and 500ml bottle.