Joe Hults (right), category manager for ABC Fines Wines & Spirits, the Orlando, FL-based chain of 170 stores, uses data from a variety of sources to determine a particular store’s beer inventory and where to locate it.


Where you position a product in a store or on a shelf can have a dramatic impact on sales. Take a slow-moving item off a back shelf and put it in a bin by the register, and suddenly it will start to sell. Move a featured item off the floor, and sales will likely settle back to more normal levels.

It’s been said about beer — and just about any other product, for that matter — that it can’t sell if it’s in the back room. On the other hand, stacking some cases on the floor and putting a few six-packs in the cooler may not be the most effective way to sell beer, either.


To maximize sales, you need more than a good sense of how to position products on your shelves. First, you need to know what to stock. Many factors, including your overall business objectives, influence the kinds of beer you stock. Once you have the right product mix, you need to know how to allocate space to categories, such as crafts, imports or domestic premiums, and specific brands. That done, you can finally get down to the business of developing a cooler or shelf set that will keep products moving out the door.

The overarching principle behind good shelf sets is category management. Retailers today have a wealth of information at their fingertips that can help them analyze their local markets and make key decisions.

“We’re going through what a lot of people are going through now,” said Ken Lewis, owner of The Party Source, Bellevue, KY. “We’re questioning whether we need 12 or 1,500 beers. Category management is much more important now.”

Category management isn’t rocket science. It does mean digging up some information, then analyzing it and evaluating it. Most of the information is readily available, and software programs can help you analyze via computer.

“Category management is just good business planning,” said Joe Patti, senior director of retail planning and category management at Anheuser-Busch. “It’s creating a good business plan.”

Look at your strengths, weaknesses, opportunities and threats (“a SWOT analysis”), Patti suggested. Compare your marketing tactics, prices, displays and selection with those of your competition. Then think about the role beer plays in your overall business objectives.

If you want your store to be a destination location, for example, you may want to stock beer brands that your competitors don’t stock. If you are building traffic on high volume and competitive prices, you may want to stock only brands that turn over quickly. Other objectives might include profitability, freshness or eliminating out-of-stocks.

“Retailers have tons of money, time and space tied up in the category,” said Joe Hults, category manager at ABC Fine Wine & Spirits. “As much as you want to provide value to the consumer and be a destination retailer, you can’t provide 100% satisfaction. You have to decide what products go on the shelf.”

One way, he suggested, is to evaluate your 10 best sellers and 10 worst sellers. Analyze what makes the top 10 sell and why the 10 worst don’t. Fix what you can, eliminate what you can’t, then look at the next 10 best and worst.

Plenty of data is available to help determine what brands to sell, and the best place to start is with the in-house sales data. After determining what sells well in your own store, Hults suggested looking at sales trend data a local and regional basis. Hult’s ABC has 170 stores across Florida, ranging from 3,000 sq. ft. corner stores to 32,000 sq. ft. superstores. Trend data tells him how his sales of certain brands stack up against overall sales of the same brands in a market. He also analyzes demographic data to find out what kinds of products consumers buy in each market based on their age, income and other variables.

“What we want to find out,” he said, “is are we giving consumers maximum value? Are we getting our fair share of the market? Are we over-promoting or under-promoting? Are we getting our fair share of promotion dollars from brewers?”

All this data can be extracted from a number of sources. Companies such as ACNielsen and Information Resources (IRI) provide sales trend data. Wholesalers can usually provide local market sales data for their own brands. A number of resources also provide demographic data.

“We’ve signed up to do a thorough study of several of our stores,” Lewis said. “Our wholesaler is helping us do that. I don’t know that it will tell us what to do with specific products, but we expect to learn where we have space inequities, which categories are more profitable and whether we should be expanding a category to make more profit.”

Technology, such as scanners and PCs, makes it easier for more retailers to analyze their own sales data, though other resources may be equally valuable.

“Retailers should turn to all suppliers,” said Tom Fox, vice president of national retail sales for the Stroh Brewery Co. “Good category management has to be a win for consumers, a win for retailers and should be a win for suppliers. If you only turn to one supplier, you’re limiting sources of ideas.”


Sales data, market trends and demographics can tell you what brands and packages consumers will most likely buy in your area. Once you decide which products to stock, you need to look at how much space to allocate for beer and specific beer brands.

“You only have so much space,” Hults said. “You have to decide how to allocate that space between high-volume, lower-profit and high-profit, lower-volume products.”

“Every time we want a new product, we have to remind ourselves that the store isn’t physically growing by 10% per year, even if our sales are,” Lewis said. “You have to review sales to see what products deserve to be on the shelves.”

Weeding out slow movers in the beer section isn’t the only factor to consider. It helps to review the sales and profit contribution of every category and brand in the store to discover if each is getting the space it deserves. One way to measure the space efficiency of categories and brands is to factor sales per cubic foot of space.

Cooler space, in particular, is at a premium in most stores because most consumers prefer to buy beer cold. That means you have to weigh how much prime cooler space to give to beer versus other beverages. A 1997 ACNielsen study, for example, shows weekly beer sales from a 10-door cooler doubled when beer’s share of cooler space was increased to 60%. Another part of the study noted that when the share of cooler space for other beverages was also increased to 60%, sales remained basically flat.

Space management can help determine more than how much space beer should get in your store based on sales and profit contribution. It also helps retailers devote the right amount of space to specific brands and packages to help reduce out-of-stocks. Studies sponsored by major brewers suggest that out-of-stock situations can be extremely costly to your business.

A Miller Brewing Co. study revealed that 15% of consumers will leave the store if their beer brand isn’t in stock. A 1998 study sponsored in part by Anheuser-Busch reported that 22% of convenience store shoppers will leave without substituting an out-of-stock brand. Worse, 2.4 out-of-stock experiences is enough for consumers to switch stores.


Once you know what products to stock and how much space they should be alotted, retailers can apply the essentials of shelf management, which is combination of science and magic.

In general, items that move fast or need to be noticed go at eye level. Slower-moving but profitable brands go up on the top shelf. And the slowest-selling packages go on the lower shelves.

There are two basic types of shelf sets — distributor, or brewer sets, and price sets. The former, as the name implies, groups a brewer’s or distributor’s products by brand. A customer would find all of A-B’s beers together, then all of Miller’s, Coors’ and so forth.

Price sets group products together by price, so consumers will find imports together, premium beers in another section and popular price beers in another. Price sets also usually lead consumers from the most expensive beers to the least.

Studies suggest that price sets can actually increase beer sales and profits because they encourage impulse purchases of more expensive and profitable brands and discourage trading down to lower-price brands. Depending on the store and its location, however, distributor sets also can be effective.

“The big brands are incredibly predictable,” said Joe Jameson, beer buyer at Kappy’s Liquor, Everett, MA. “They’re pretty steady. You can hide brands like Bud and Heineken and customers still find them. We have to put others on the floor or at eye level to get customers to see them on the way to brands they usually buy.”

The right shelf set is the one that works for you. For example, Happy Harry’s Bottle Shops, based in Grand Forks, ND, have no shelves dedicated to warm beer. The store uses two six-foot by ten-foot floor stacking areas for fast-moving craft and import brands like Corona, Heineken and Sam Adams. Cooler shelves are categorized by price segment, and craft and imported beers arranged by state or country of origin. Laminated signs with state or national flags signal what’s inside the cooler door.

“We limit what we put out on the floor so people don’t get a bad quality perception,” said Todd Jacobson, beer buyer for the chain. “We track sales to make sure brands are worth the real estate, and we’re constantly bringing in new products, so we have to make room.”

While shelf sets will vary from store to store, a strategy brewers recommend is “days of supply,” an idea that distributors and brewers should be set in the same percentage of space they represent in sales. Basing sets on days of supply can be a more efficient use of space.

“A brewer might get 60% of a retailer’s cooler space because it has 60% of the store’s beer sales,” said Fox, “but it may not need that many facings. In general, retailers should strive for efficient variety and no out-of-stocks. That means you have to measure each package on its own merits. If you’re selling 20 12-packs of a certain brand each week, and you’re only stocking 10, you should double the shelf space for that brand.”


Technology has advanced so much in the past several years that analyzing and evaluating data can be done much faster and more easily than in the past. Computers can help with decisions on what brands to stock and even produce store level schematics in color to show what different shelf sets look like.

“The idea behind category management is to give you the brands your customers want and the information to support why that’s the right decision,” Hults said. “Shelf sets aren’t changing much. How we get there is changing. Our data is better, cooperation with our suppliers is better. The thing that sticks in my mind is consumer value. That’s always the first thing you want to think about.”

“The key thing is that category management is done at some level,” said A-B’s Patti. “You can make it rocket science or keep it simple. You can look at all the factors that can affect sales or just a few. Pick priorities and look at what’s important. Just be action-oriented. Get started.”

Supplier Programs

“Space Management Strategy” is a new brochure recently introduced by Miller Brewing to help off-premise retailers more effectively merchandise their coolers. The booklet suggests that arranging a beer cooler by price segments is the best revenue-building use of retail cooler space.6801BEER9

Miller Brewing recently came out with this new “Space Management Strategy” brochure.

“This brochure outlines Miller’s space management strategy, which is a combination of objective analysis and price level merchandising,” said Kevin Doyle, vice president, national accounts and sales development. “Price level merchandising can result in nearly a 14% increase in revenue over traditional distributor sets, which group beer brand families together.”

Other strategies discussed include the need for appropriate days of supply on various beer packages, the value of proper cooler space management for fastest-selling brands and preparation for peak sales periods. The book is available free, where legal, from Miller Brewing by calling 1-800-MBC-BEER.6801BEER4

Members of Anheuser-Busch’s wholesale distribution team customize programs to meet each store’s particular space management needs.

For its part, Anheuser-Busch highlights several different programs to help retailers target beer consumers. “Members of our wholesale distribution system and field managers meet with retailers and try to understand what the retail objectives are,” said Joe Patti, senior director of retail planning and category management at Anheuser-Busch. “That allows us to customize the program based on the specific location.” For example, A-B’s “Eagle Eye” is a customized version of the Spectra Micro Marketing System, which is based on shopper demographics and purchasing preferences. Another software program available from A-B is “Shelf Set 3000,” an adaptation of Nielsen’s Spaceman space management software. The “Shelf Set 3000” program allows retailers to customize their shelf sets relative to their specific conditions, Patti said.

Michael Sherer is a Seattle-based writer and consultant specializing in beverages and foodservice.


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