Constellation’s recent call for distributors to focus on the “high end” of the beer business and write off premium and economy brands (which represent about 70 percent of industry volume) has gotten a lot of attention.
One argument — that retailers should shrink the variety of pack sizes they carry — deserves a little more analysis.
Beer Business Daily quoted Constellation beer division boss Paul Hetterich as stating the following:
“Is it really necessary to have 6-packs, 12-packs, 18-packs and 24-packs of 12-oz. cans, and then exactly the same packages in 12-oz. bottles? Plus, 4-packs, 6-packs, 18-packs of 16-oz. cans; 9 and 15-packs of aluminum bottles… You get the point,” he said. “Are they really needed to satisfy the consumer demand in that store?”
Now, the merits of individual packs can always be debated (and retailers track their performance very carefully to identify the movers). But as to the broader question of whether it’s necessary to have a wide variety of packs to meet consumer demand? The answer is, unequivocally, yes.
Carrying multiple offerings helps deliver against varying criteria — pack preference (bottle or can), price point (budgetary constraints) and consumption occasion. Though you might buy a 24-pack for a large party, you might only want a six- or 12-pack for a smaller gathering.
Moreover, according to Nielsen Homescan data, 81 percent of shoppers are exclusive to a container type (glass or bottle) and 70 percent of shoppers are exclusive to a pack size. For example, 91 percent of premium 12-pack buyers are exclusive to a container type, with 42 percent exclusive to bottles and 49 percent to cans.
The premium segment accounts for a considerable number of beer buyers that exhibit strong loyalty, with as many as 45 percent of all their beer dollars attributed to their favorite premium pack/container type, according to Nielsen Homescan.
And if the preferred pack is not available? In that case, 51 percent of sales are at risk and 32 percent of shoppers will do without or buy from a competitor, according to Oliver Wyman data. And no retailer wants that.
So do retailers need to carry multiple packs to satisfy consumer demand? Absolutely.