Fill ‘Er Up

Growlers are a roaring business for enterprising retailers. In-store kiosks filling up those little brown jugs of beer to-go are appearing in venues as diverse as supermarkets, convenience stores and even pharmacies, as well as wine and liquor stores and large beverage alcohol chains. Consumers are thirsty for craft beer, and there are plenty of advantages to growlers stations, including higher margins, attracting new traffic, increasing customer loyalty and creating a competitive point of differentiation. There are also some nuts-and-bolts considerations and a few hurdles to getting into growlers, but, say operators, the payoff is worth it.

A key driver of the growler phenomenon is the craft beer explosion. Volume was up 15% and retail dollars boomed 17% in 2012, according to the Boulder, CO-based Brewers Association. Many beer aficionados swear beer tastes best when it’s fresh out of the keg, and consumers are already accustomed to taking home growlers from their favorite local brewery.

“The practice is a throwback to the mid 1880s, when people used to get fresh beer from the bar and bring it home in pails called growlers,” points out Jeff Shields, communications manager for Sunoco Logistics/Sunoco, Inc. The company was a pioneer in the field, testing a Craft Beer Exchange program in a dozen Sunoco APlus convenience stores in 2011. “Customers took to it immediately,” recalls Shields. “We were looking to set ourselves apart from other convenience stores and this program accomplished that.” The Craft Beer Exchange has since been extended into 69 stores in New York and South Carolina, and the company is looking to expand the program to other markets, where state laws allow. “The Craft Beer Exchange has brought more business to the stores; we’ve seen sales go up in general,” says Shields. “It’s been better for business across the board.”

Laws & Orders

Not every state and locality allows growler sales, but that is changing for the better. “Growlers are clearly on the radar of state alcohol beverage regulators,” says Paul Gatza, director of the Brewers Association. A preliminary survey by the association indicates at least 33 states currently allow growler sales under a retailer license. Specifics of the laws vary widely. “The language for each state is tailored for that state’s needs and political situation,” he adds.

When the state of Delaware changed its laws last spring, Peco’s Liquors in Wilmington was ready with an eight-tap system. “We wanted to be the first retailer in the state to offer growlers,” says director of sales & marketing Edward Mulvihill. That also precipitated a long overdue renovation that added 12,000 sq. ft. to the store, about 200 sq. ft. of which was dedicated to the growler station, which was bumped up to 16 taps. With only six months in operation, the growler station is now the number-one category in the store, says Mulvihill, accounting for about 5% of overall sales. “Our goal is to build growler sales to 15% of our overall business.”

“One of my salesmen told me that the law had changed in Maryland,” recalls David Carney, co-owner and primary managing partner of The Wine Bin in Ellicott City. Carney visited Pine Liquors, the first retailer in the state to offer growlers, and came away convinced the idea was a good one. Getting a license was simple. “The biggest hurdle was jumping into the pool, spending the thousands of dollars I needed to get started,” he says. “It was kind of scary but the growler station definitely paid off.” The Wine Bin’s setup consists of just five taps of rotating selections, and two sizes of containers, a 64-oz. growler and the 32-oz. Squealer—too small to growl. “It’s been a great addition to our business,” enthuses Carney. “I get a better margin on draft beer, my customers get really fresh beer, and it’s better for the environment—all those bottles kept out of landfills.

Tapping Into New Business

“The growler program brings in new customers just by having that different offering; it helps differentiate us from our competition,” says Jeff Rubin, senior merchandising market manager for Duane Reade. The New York-based drug store chain was another pioneer when in 2011 it installed a seven-tap draft beer station at its drugstore in hipster Williamsburg, Brooklyn. “The trend was just beginning then, and we figured it would be suitable for the neighborhood, also we had extra space in that store,” recalls Rubin. After that successful test, the concept was installed in three other Duane Reade stores. “It’s meeting our expectations.”

“Our draft beer selection draws more customers than the average liquor store would get,” says Beau Orsi at the Liquor & Wine Warehouse in Dayton, OH. The five-tap growler station draws customers from an hour’s drive away. The concept has been in place since the store opened five years ago. “It’s been successful,” asserts Orsi, “and it lets us carry a lot of craft beers you can only get on draft.” Liquor & Wine charges $5 for the container; 64-oz. fills range from $8 to $22.

“For us the biggest advantage was that we have built Peco’s as a niche for craft beer,” notes Mulvihill, “but we hit a roadblock because a lot of new, small or local breweries were producing beer we couldn’t sell because it was draft only.” Growlers solved that problem. Peco’s sells the containers for $5; beer for a 64-oz. size ranges between $10.99 and $20.99; 32 oz. run half that. “The response has been really great, pulling in a lot of new customers,” says Mulvihill, as well as encouraging trading up from domestic to higher-priced craft. “We’re seeing a lot of guys who are usually light beer drinkers gravitating towards craft beer at the taps.”

Although Carney carried a good selection of bottled beer, because the store name is The Wine Bin, there was not much of an association in customers’ minds with craft brews. “Since I installed the growler station, my beer business has doubled,” reports Carney, both on draft and in bottles. “It has definitely brought out the beer drinkers.” The retailer makes the point that many of his wine customers are women; now their husbands are frequenting his store to check out the draft offerings, and have discovered The Wine Bin’s packaged beer selection as well. Another big advantage is that because of the kegs’ case equivalency, his store is now considered a large beer account by suppliers, and Carney is able to get more allocated product. “Now when there is a rarity, only 50 cases coming into the state, we get one.” That bounty greatly strengthens The Wine Bin’s appeal with beer geeks.

Getting a Handle On It

Most growlers are 64- or 32-oz. glass bottles with a handle; brown glass shields the liquid from sunlight and the dreaded “skunkiness.” Growler materials and sizes are an area of innovation, observes Gatza at the Brewers Association, including stainless steel containers, plastic bottles and treated paperboard cartons. “Recently, I saw a can filled with beer and sealed right at the bar for take-out,” marvels Gatza. Oskar Blues Brewery offers this trademarked “Crowler” at its taproom.

Beyond the typical glassware (32 oz. bottles for $2.99, 64-ounce growlers for $3.99), participating Sunoco APlus stores retail a 2-liter special-edition ceramic swing-top growler for $13.99. Customers can also purchase a $19.99 gift box, which includes growler, two pint glasses, coasters and a free fill-up. Regulations require that each bottle top is sealed with a special sticker, notes Shields. Beer line cleaning and other maintenance is provided by a third party specialist, he adds.

“Our biggest recommendation is to keep startup costs and overhead low. Operators will have to experiment and try things during the first few months to discover what works best in their market,” says Tony Lane, vice president and co-founder of The Growler Station/GS Dist. Group. The company runs the Growler Station Express Program in some 30 independent affiliate stores nationwide, which use their equipment and technology, including a patented counter-pressure filling system that improves growler shelf life. Setups are tailored to each location; services include design, installation and maintenance, in-store digital menus and websites and a beer wizard app. Additionally, The Growler Station has a partnership with Total Wine & More, working with the retail giant to launch growler programs in new stores.

To get up to speed with its program, Peco’s started with a soft opening. “We spent a week working with our employees to get a consistent pour,” says Mulvihill. Tapping kegs and dealing with excessive foaming can be an issue, so staff first practiced with a keg of inexpensive beer. “Now we have it down to a science.” He also stresses the importance of rotating kegs to keep both beer and selections fresh, and customers interested. “Don’t get overloaded on one style or brand,” Mulvihill advises. And for those customers new to craft, Peco’s always offers an easy-drinking malty beer or a pale ale. “Something besides IPAs with kick-you-in-the-face hops.”

Within the first month of pulling drafts at The Wine Bin, Carney was ready to bump up to 10 taps; but now he advises against it. “More is not better; five taps are the perfect number to show off the range of beer styles.” He always offers an IPA, a stout, a malty ale, and some unusual specialties. “With 10 taps, you would be repeating styles, and customers can’t taste all 10 beers anyway because of tasting laws,” he notes. Just five taps means kegs kick quicker, for fresher beer and continually rotating choices. Customers will fill a growler on Friday night, return Saturday for a different brew, and then come back on Monday to fill up again for the football game, says the retailer. “With the beers changing out so often, we get customers in two or three times a week.”

Hop To It

“The hardest part was getting the law passed,” declares Mulvihill. “It was also uncharted territory. We’ve been in business almost 80 years but selling draft beer was new to us.” Cannibalization was an initial concern that proved unfounded. Sixpacks are generally cheaper ounce per ounce than their draft counterparts, but consumers are willing to pay for novelty and freshness. “People see growlers as cheaper than buying a pint at a bar,” he notes. And many customers fill a growler and grab a sixpack as well because the draft is meant to be consumed immediately and the bottled beer is saved for later. “We get two rings out of one customer.”

“Even if someone comes in specifically to fill a growler, they will usually also take a look at our bottled beer selection,” says Orsi. Liquor & Wine Warehouse offers single bottles of many of its craft beers as well as sixpacks. That makes the price of high-end beers more affordable and encourages impulse sales.

Although Carney is totally sold on selling growlers at The Wine Bin, he warns that draft beer is not for the typical liquor store with just one person at the check-out counter. He has extra staff manning the growler station, especially on busy weekends, to talk beer and tap it. “Growlers are more labor intensive, there’s waste, you to have to know how to deal with foam. There’s work involved, but there’s a big payoff.”

Hear Me Roar

Liquor & Wine Warehouse updates its website as draft selections change so customers know what they’re looking for. With undecided customers, free samples are offered. “Someone doesn’t know if they want to spend $19 for a growler of Epic Brewing’s Big Bad Baptist, we’ll just pour them a splash. That taste will usually convince the customer,” says Orsi.

Duane Reade also offers in-store sampling, and entices customers with social media and email blasts to its customer loyalty base.

Sunoco runs a Growler Club, with a card that entitles the holder to one free fill-up for every 10 fills purchased at participating APlus stores. The company also keeps customers current with its blog, craftbeerexchange.wordpress.com, detailing the offerings on tap at their nearest Sunoco APlus store. In store, cards describe each of the beers, the style and origins. “That’s part of the fascination for people,” notes Shields.

The Wine Bin runs regular tasting events with both wine and beer. Regular growler customers have their own tasting mugs to sample new brews on tap. Staffers are well-versed in beer styles and history. “Beer doesn’t sell by itself,” says Carney. The store maintains an active Facebook page and emails a monthly newsletter to 10,000 customers. Regular customers get points for every dollar spent on draft beer; 100 points earns a $10 rebate. That customer rewards program keeps them coming back for more. By state law, The Wine Bin can only fill growlers with its name stamped on the glass. Carney sees this as a great word-of-mouth tool. “People see our growler at a party and say, ‘The Wine Bin? I didn’t know they sold beer.’”

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