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By Mehgan Belanger
Beer caves can offer a near silver bullet for the basic challenges facing the beer category in c-stores -- keeping out of stocks and labor low, while raising cold stock -- but are not without their own set of difficulties, including security, assortment and customer awareness. However, early adopters in the c-store industry have developed best practices to address these challenges, and discovered this cold space can provide lucrative profits all its own.
There are 52 "Beer Kegs" in Flash Foods' 176-unit convenience chain, a substantial number that is indicative of the success the Waycross, Ga.-based retailer has seen with beer caves. Most of the stores that boast a Beer Keg are either razed and rebuilt sites or new locations. A few caves were added to stores as retrofits, and in those areas, the chain has seen a 10 to 15 percent jump in beer sales, according to director of marketing, Phil Settle, who explained the section's success comes from the reduced execution required.
"In a standard cooler set, store level execution of volume packages is a real challenge, especially at peak selling times. Ideally, beer should flow from the hot displays to the back of cooler to get it cold, and then to the shelf. That execution invariably breaks down at some point," he said, noting breakdowns do not occur in a beer cave because the storage and shelves are one in the same.
C-stores with beer caves are poised to capture profits from recent beer trends, as larger pack sizes chip away at the smaller pack's market share. Single-sale bottles make up more than half of beer's unit volume in c-stores, at 51 percent, but 18-packs and larger account for nearly 10 percent of the c-store beer segment. Also, 18-packs grew in share by 0.4 percent last year, while the singles segment fell 0.6 percent, according to Convenience Store News' 2008 Industry Report.
The upswing in larger pack sizes is a trend that has not gone unnoticed by c-store retailers. Nice N Easy Grocery Shoppes' director of category management, Jared Sturtevant, noted Keystone Light 30-packs are No. 1 in units at the upstate New York-based chain, which is home to several beer caves, all in newly built locations.
While beer caves can remedy execution troubles, they face the challenge of building awareness and getting customers inside. When Flash Foods' first beer cave was built nearly seven years ago, the chain placed signs on six-pack and singles doors, directing customers to the cave for larger packages, said Settle. Inside the cave, neon lights are attractive, and plastic advertising frames and the use of adjustable pricing materials not only give a consistent look, but also provide effective price communication, he advised.
At CSNews' Cold Vault Roundtable, held earlier this year in St. Petersburg, Fla., attendees acknowledged the challenge of getting customers inside beer caves, and shared strategies to do so. Mike Zielinski, president and CEO of Royal Buying Group, recommended floor graphics that "pop" to encourage customers to enter the cave, while Sturtevant said Nice N Easy took an idea from upscale grocer Wegmans Food Markets, and added additional light inside the cave and an automatic door.
Sam Sumrall, president of Bay Springs, Miss.-based Short Stop Inc., also approved of neon as a good way to attract customers' attention to the cave. Three out of the chain's four locations have beer caves, all of which have beaten his expectations since the first was installed in 2001.
Similar to Flash Foods, Sumrall said the chain uses signage throughout the store to alert customers about the cave.
Ultimately, though, interaction between store-level personnel and beer customers about the beer cave is the best way to get customers inside, Settle said. Upselling customers to larger sizes also works for Short Stop. "If customers come up to the register with a six-pack, we train cashiers to tell them they can cool off and pick up a 12-pack" at the same time, Sumrall said.
As beer caves in c-stores become more ubiquitous, customers have become aware of the section's purpose. But this doesn't mean proper marketing is not required, Settle explained. Using the phrase "Coldest Beer in Town" is a best practice for marketing the cave both in the store and on the lot, according to retailers.
Once customers are inside the cave, it is important they have a positive experience. To ensure this, Sumrall stressed organization, and said his store managers check the area often to keep it clean. Another tip is keeping the cave as cold as possible to reinforce the cold beer message. Flash Foods' Beer Kegs are kept between 29 and 30 degrees, and have not had any problems with freezing.
Merchandising the section similar to warm floor displays is also a key best practice. Both Short Stop and Flash Foods merchandise 12-packs and larger in the beer cave this way, while singles and six-packs are placed in cooler doors adjacent to the cave at both chains.
"We did have a couple of stores where six-packs were in the caves, and we will never do that again," said Settle. "Customers tend to 'browse' six-packs and singles, as there is a lot more variety. They do not do that in a beer cave."
Security is why Short Stop does not keep six-packs in its beer cave. "With smaller packages, customers can put cans in their pockets," said Sumrall.
As for product assortment inside the caves, retailers said the best-selling products in larger sizes work best. The majority of the beer in Short Stop's caves are from the three largest domestic brewers -- Anheuser-Busch, Miller Brewing and Molson Coors -- with Anheuser's Bud Light the best-selling, Sumrall said. No imports, microbrews or specialty beers are stocked inside the cave.
The same holds true for Flash Foods' Beer Kegs. These types of high-end beers should not be placed inside the beer cave unless they are available in large pack sizes, but most often, they are only available in six-packs, Settle said.