On August 25, 2015, Nightclub & Bar, along with sponsor MillerCoors, presented a free webinar: Maximizing Profits Through Optimal Beer Selection. Featured speaker Joe Abegg, Director of Category Management for MillerCoors, addressed the rapid increase of beer consumption in all segments of the on-premise market. You must learn how to optimize your beer selection to exceed customer expectations and differentiate you from your competitors. Whether you were able to attend the webinar or missed it, we pulled out the most valuable bits of information for you.
Understanding What Your Customer Wants
- Only 7% of beer drinkers are exclusive to craft beer, which only represents 4% of category volume. 23% of beer drinkers are exclusive to premium light, which represents 23% of category volume.
- According to TNS market research published in 2013, premium light drinkers consume 1.2 more beers on occasion than craft drinkers.
- The results of a BTS Consumer Survey study released in 2013 show that craft beer drinkers are interested in all styles of beer: 22% of their beer is premium light and 21% are imports.
- Craft beer drinkers make selection based on occasion and 26% of them select premium while watching sports, according to Scarborough market research published in 2013.
- A Nielsen Homescan study released in 2012 found that 50% of beer drinkers reported that a seasonal beer was their first craft when they ventured past premium light and domestic regular.
- Research shows that the majority of beer drinkers first start their journey with beer with premium lights. Beer drinkers then move on to invitation brands like Blue Moon, Samuel Adam’s or Leinenkugel’s before exploring other styles that offer more diverse, complex and intense flavor profiles. After trying such beers they experiment with robust, intense and unique flavors, which are consumed in much smaller quantities than other beer styles. The information available suggests that beer drinkers go right back into the premium light category.
Understanding Your Business
- Your top 8 beers make you the most money.
- 6 out of every 10 checks feature beer sales.
- Your average total alcohol beverage (TAB) sales should be 75% while food sales should be 25%. Beer should make up 60% of TAB, wine should make up just 10% and spirits should come in at 30 percent. Beer is the moneymaker in the vast majority of bars.
Build the Right Solution
- Keep in mind that consumers choose beer brands over beer styles.
- Premium light beer is preferred on 52% of occasions.
- Not everyone who identifies as a craft drinker consume products that fall only within that category; craft drinkers drink all categories of beer.
- Adopting a bottle strategy allows you to more cost effectively experiment with your beer menu because kegs are costly and don’t last as long as bottles.
- A glassware program can help you to increase profits. American light lagers should be put into 22 ounce glassware and will make around $1 more per beer sold. Use larger size glassware for light beers, keeping in mind that bigger glass sizes work best for 4 to 6 percent alcohol beers. Smaller glassware works best for beers that feature alcohol percentages ranging from 6 to 8 percent. The right glass means more servings sold.
- The most effective pricing strategy is customer-based pricing; if your guests are willing to pay more, charge more.
- Craft beer and imports are inelastic, meaning they are less price sensitive than their premium light counterparts in terms of price and sales. In contrast, premium light beers are elastic: the more you charge for them, the less you’ll sell.
- An average weekend day delivers more than 50% more beer revenue than an average weekday.
- The discounting of craft beers and imports actually cannibalizes revenue so don’t discount them heavily.
Questions & Answers
Joe was asked the following questions during his webinar:
- I think light beers taste generally the same on tap or in bottles but craft beers taste better in draught. Wouldn’t it be better to just offer light beers in one form? You see an increase of about 8 to 10 percent of both bottles and draught when you have premium light beers on draught.
- Of 36 craft taps, how many light beers should we carry? I would put all three of the big mainstream premium light beers on tap: Bud Light, Miller Lite and Coors Light. If you eliminate one, you’re giving up on a customer who is brand loyal.
- How can a business make money when draught beer is getting more expensive? There is an increase of about 2% on beer, less than the cost of goods on food. You can still get high margins on beer, about 75% to 80 percent. Have a glassware strategy. Taking off light beer for a 2% increase wouldn’t be the best move; you can easily make that up with glassware, increasing the price of a 22 ounce beer one dollar.