Cheers! A Beer, Wine & Liquor Merchandising Report

Alcoholic beverage marketers have discovered that competition and retail attitudes are changing the way they go to market. Across the board in beer, wine and hard alcohol categories, they are finding success by producing fewer and higher-quality P-O-P programs. They are also focusing their attention on each account's needs, whether that means customized display pieces, flexibility to fit available spaces, or category-management programs."There is more competition in the market across the board," says Michael Wolf, senior brand manager for Bolla and Fontana-Candida brands for the Wine Group of Brown-Forman Beverage Group Worldwide, Louisville, Ky. "By that I mean we compete with everybody for space -- wine, beer, cereal, charcoal -- everything wants more space. Our promotions have to work harder, materials have to be more durable and the messages have to be more meaningful to the consumer and the retailer's environment."Adds Lori Churich, project manager at Robert Mondavi Wines, Napa, Calif., "We're looking at producing less, doing fewer promotions and making them higher quality. Our goal is to make pieces that are more effective, more durable and more useful for the retailer, which will ensure they stay on the floor longer."That's also true in on-premise locations. "There's more competition than ever to get space in restaurants," says Kevin Kramnic, promotional marketing director for Barton Beers Ltd., Chicago, importer of Corona Beer and several other brands for the eastern United States. "We're focusing on fewer but better pieces to stand out and ensure they will be used."Focused EffortsThat trend puts more emphasis on producing the right materials, since missing with the targeted pieces doesn't leave any fall-back options. But by focusing attention and money, marketers believe each piece can be more effective. "We're focusing on producing more materials that provide a 'Wow' factor in the store," says Wayne Sindelar, marketing services manager at Gambrinus Inc., San Antonio, which imports Corona Beer in the western U.S. as well as Moosehead, Pete's Wicked Ale and others. The company has found notable success by using inflatables, he says. "It's not a new idea, but it's working well for us and gets attention. We need to ensure that each piece gets the most bang for the buck so it gets up in the stores."At E. & J. Gallo Winery, Modesto, Calif., marketers are focusing more attention on durable, theme-oriented pieces that they promote to retailers with an umbrella theme under which the retailer can add his own promotional items. For instance, the company used a three-dimensional Tiki hut and palm tree display last year in a co-branding effort with its Bartles & Jaymes wine coolers and Hawaiian Tropic suncare products. The two products fit together since they had similar demographics. Retailers were encouraged to add more products, including coolers and beach accessories to make the display a "base" for summer products. The idea was promoted to retailers as a "1+1=3" concept, meaning there was more to be gained than simply promoting the two lead products."We can spend more on those types of units because retailers will keep them up all summer as the focal point for their summer-product promotions," explains Matt Sinclair, Gallo's national director of sales promotion. "Not all retailers will leave it up for the entire period, but many will take it down and reuse it later in another way since it's a nice piece, it's durable, and it isn't time-sensitive. It doesn't scream 'Bartles & Jaymes,' so it gives the retailer elasticity."Brown-Forman's Wolf agrees: "The most significant direction we're taking is to produce pieces and generate activity that will lead to longer-term programs," he says. "These are pieces that have more breadth to their existence than just paper that is replaced quickly. They offer continuity for the brand and better potential."The company used an E-flute corrugated display for its Bolla holiday promotion in 1997. Last year, it produced a motion-oriented piece of molded plastic. "It gave us a better look and longer life, and many retailers continued to use it after the promotion ended."Smaller Sizes DominateThe focus on higher-quality pieces extends to the smaller programs, too, says Jason May, P-O-S manager for Skyy Spirits, San Francisco. "We're moving our budget from large displays into case cards and smaller pieces that retailers are more likely to use," he says, "but we're putting more money into those cards."May says he's incorporating new substrates, such as foamboards and metals, to get more impact. And he's dressing them up with illumination in various formats. "We've found smaller, more costly pieces do better and are more well accepted," he says. "Huge displays and pole toppers are coming down, unless there's something really dynamic about them."In part, May adds, some retailers fear that these large displays and pole toppers block their view and provide nooks where shoplifters can hide. Other marketers agree that stores' "clean-floor" policies are making it tough to get onto the floor with big programs. "Retailers don't want a lot of P-O-P," notes Mondavi's Churich. "But they're still willing to consider pieces if they're creative."Flexibility RulesTo meet those needs with fewer pieces, marketers are realizing that their P-O-P needs to be more versatile. That serves as a catalyst for new formats. "Pieces that offer changeability and provide ultimate flexibility are in demand," says Joe Jones, director of brand promotions for Miller Brewing Co., Milwaukee.The company has found success with styrene plastic signs that attach above gondolas or, in a smaller size, to a cooler door and allow for changing promotional messages or pricing information. "There's more upfront investment in that than a regular sign, but over the long-term, it's more cost-effective," Jones says. "It also looks more professional because it's not hand-written. It's readable and offers a clean presentation." On-premise accounts are also focusing on flexibility and cleaner presentation, using acrylic table tents with replaceable menu cards rather than paper ones.Miller is producing more sizes and shapes than ever before, notes Jeffrey Waalkes, Miller's sales communication manager. "Any space is a good space for beer P-O-P," he says. That includes above coolers, on the ceiling, in windows, and in the space next to the cooler. "Every available space should be considered for extending the message."Customized Pieces GrowAccount-specific programs are becoming more important, notes Matt Borgard, senior national accounts manager for Barton Beers. At the same time, consolidation in the market and new technologies are making those requests easier to fulfill. "As the key players become larger, they become more powerful in the category and ask for more materials," he says. "But as they grow larger, the production run for an account-specific piece lengthens, too. That makes it more cost-efficient for us to meet their requests."New printing efficiencies and the ability to go direct from graphic to printing plate with no intermediary film aids that, notes Barton's Kramnic. "That makes a world of difference in being able to customize pieces, because time and cost concerns are reduced significantly." As those costs shrink, the marketers feel that they have more leeway to produce higher-quality pieces in other areas.Co-Branding Extends BudgetsCo-branding efforts also allow budgets to stretch further and provide more value to the retailers, marketers note. Gallo, for instance, will promote a national tie-in with Tyson Chicken (in the East and Midwest) and Foster Farm Chicken (in the West) this summer, creating a combined chicken-grilling and wine-drinking campaign. The company is also working with various cheese vendors to produce regional promotions for dollars-off coupons on cheese products in conjunction with wine purchases. Gallo prints the materials, the cheese vendors absorb the coupon discount, and the retailer gains an added-value promotion.Boston Beer Co. is also involved in more co-branded efforts, notes Lewis Goldstein, director of brand promotions for the Boston-based brewer. Last year, it worked with Sunkist pistachios and Cape Cod potato chips on combined, large-scale displays, and this year it will produce displays in conjunction with Snyder's pretzels for an Independence Day event. "Our goal is to provide more value for the retailer through partnerships," he says. "It gets us more space in the store and meets the retailer's goals better."Spending Patterns ChangeRetailers are eager for these programs, Gallo's Sinclair says, due to changing spending patterns. Gallo's research in conjunction with A.C. Nielsen shows that although customers are making more trips to the store, each trip is much shorter, and fewer of them involve purchases of food to be prepared in the home."Retailers are coming to us and we're going to them," Sinclair says, "to find ways to leverage brands together and entice more shoppers to buy food for home preparation." But that program must offer value, he notes. "Endcaps in other departments are a hard sell unless you offer a real working concept. Putting a seafood header in the Seafood department no longer works. They take up space. Retailers want something that adds value."That value has to be apparent to the chain's buyer, the store manager and the department manager, he adds. "It's an education process to explain the value at first, especially if they're looking to keep the floor clean. Plus, we have to work with the meat buyer, the seafood buyer and the deli buyer, because they have to be behind the program, too, or they'll take the displays down themselves no matter what corporate says." That also works the other way, he notes. Chains often say that while they won't officially back a program, they won't nix it either if the marketer can convince the local managers to support it."Co-branding efforts supply the type of value retailers are looking for," Sinclair says. "Two names on the P-O-P are much stronger than only one. It creates synergy and spreads out the cost."Category Management BlossomsRetailers are also paying closer attention to category-management trends, notes Miller's Waalkes. "Category management is becoming a concern for almost every retailer, because they're realizing they all can gain a competitive advantage if they use it correctly." That, ultimately, affects the P-O-P materials that marketers can put up in the stores."Once a store has analyzed what sells best in what package sizes, the P-O-P must reflect those core brands and draw customers in," Waalkes stresses. That should be reflected in both permanent and temporary pieces. "The retailer needs to have both its P-O-P strategy and tactics working together, and these should be based on what the category-management data is saying." Those choices can be significantly different for cooler brands versus those on the shelf, he adds, creating two different markets in one category.New, Focused ChannelsThe need to create more effective pieces has led marketers to differentiate more closely among channels. "Our most prevalent activity comes in looking at our business by the different channels open to us, including on-premise, retail chains and independents," says Brown-Forman's Wolf. "We're trying to identify the distinctions among those customers and target pieces to their specific needs, in conjunction with partners we can develop."One demographic channel that's opening rapidly is the Hispanic market, which is attracting attention from a wide range of product marketers, notes Federico Mejer, product manager at Barton Beers. "There is an incredible volume opportunity there, and everyone is jumping on it," he says. "And as that market grows, we can justify making better-quality pieces and targeting smaller segments and accounts." Creating these pieces, he stresses, involves both language and culture changes. The growth in the category is also opening the door for smaller Mexican-originated brands, he notes. In addition, he is finding many Hispanic-market stores are designed around a traditional "wall of value" presentation, which provides a market for permanent fixtures with a big impact.On-Premise EvolutionOn-premise accounts are seeing evolutions in creative thinking as well, notes Barton's Kramnic. They're focusing more on managing the entire "neighborhood" of the restaurant, seeing the whole environment as an opportunity to project selected messages. That includes restrooms and the juke box, where video monitors can project messages while songs are selected. They are also looking at floor graphics, lenticular signs and other retail-oriented pieces -- at least until those overwhelm the ambiance."Adding display pieces can walk a fine line because they have to be used in conjunction with the restaurant's look so they don't cheese up the operation," says Barton's Borgard. "We can offer the traditional vinyl pennant strings to one account, floor graphics to another, or neon waitstaff buttons, depending on the account's approach. Overall, we're producing fewer but better pieces to help ensure that the piece gets used, and we're aiming for flexibility."An example of the company's higher-quality approach to P-O-P can be seen in its serape mirror, Kramnic says. Rather than simply etch or print on the mirror face, Barton has taken serape material and draped it around the mirror, creating a more upscale piece. It has also produced a 6-foot serape banner that stays up longer than previous vinyl styles and ties into the overall look. "We're taking a more account-specific approach to each restaurant and relating the materials we supply to their specific needs."For his on-premise accounts, Miller's Jones says he's focusing on "appropriate branding at the tap handle that's legible and projects strong branding." In addition, he says, traditional value-added pieces such as chalkboards and inflatables that add a sense of fun are popular.At Gambrinus, the focus has been on all-encompassing kits that provide one-stop shopping for retailers regardless of their decorating needs. Last year, the company produced one kit, which includes banners, table tents, posters and related items. This year, it will produce six. "They make it easy for our distributor network to sell the program into the retailer as a package," he says. "That's a trend that is accelerating for us."Certainly the search for new approaches, materials and technologies won't slow as marketers focus their efforts and look for ways to make their products stand out. "Every day we're seeing more new ideas," says Brown-Forman's Wolf. "When you walk into a supermarket, you are bombarded with visual stimuli. You have to find a balance of not being too overwhelming or too obvious. It's a balancing act, and I think it got out of hand in the 1980s, when companies got ahead of themselves and over-reached. They produced pieces that weren't cost-effective."Alcoholic beverages face some restrictions that vary from state to state, including being allowed to place only one P-O-P sign per brand in some locations. But new opportunities may present themselves as restrictions on another product -- cigarettes -- become even tighter, notes Miller's Jones. Such items as Open/Closed and Push/Pull signs on doors, curb signs and similar pieces that were routinely supplied by tobacco companies in the past will have to be replaced when cigarette P-O-P is eliminated. That opens the door for a variety of marketers to grab permanent real estate.Another coming trend may help focus marketing efforts even more, Wolf notes, as supermarkets continue using customer-loyalty programs. "We anticipate using more kiosk-type developments to create databases that aid retailers," he says. "The infrastructure exists to provide marketers with that information. I believe we'll see more education-oriented stands in the retail environment because they're becoming more cost-effective to do all the time. Retailers need to create ways to draw customers in and encourage return trips. The effort to achieve that will continue in some form."

Cheers! A Beer, Wine & Liquor Merchandising Report

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