Beer Boss

Cheers, June, 2001 by Michael Sherer

Manage your beer category like you manage your staff to deliver higher returns.

The goal of any bar is to make money. Even if you run a pub for the sheer pleasure of providing a place where people can gather to share a decent glass of beer and pleasant conversation, you need to make enough money to stay in business. Making money is a matter of managing your resources.

Category management at retail has become increasingly sophisticated with each successive advance in technology. The use of bar code scanners, consumer data and software to crunch the information has made it easier to select and control inventory of all types of products.

The on-premise industry may not be on the same level of management as retailers, but operators don't need scanners to tell them what sells and what doesn't. And while not every operation has a state-of-the-art POS system, beer category management in bars and restaurants is far from a hit-or-miss proposition these days.

True category management is proactive, not reactive. It means constantly assessing the mix of products on hand. That means stocking the right number of the right brands, in the right packages and quantities at the right price. Being right all the time is no easy task, but beer category management is more about staying on your toes than getting it perfect. The more adaptable you are, the more likely you are to maximize your beer profits.

PICK YOUR PORTFOLIO

The first step towards a profitable beer program is picking the right beers to carry. With thousands of brands available, beer lists can vary tremendously. Ask most operators how they pick and choose from that vast assortment, and most will likely tell you they don't think about it, they just do it from experience.

"I carry what's going to sell," said James Berg, vice president and general manager of Bistro Bella Vita, Grand Rapids, Mich., "based on my experience being in the business." The two-unit operation is known for its Martinis, but has a respectable beer list with eight draft and 35 bottled beers.

But there's more to picking what beers to stock than just gut instinct. The more facts you have at your disposal, the less emotional your decisions will be, and the more likely your beer list will be profitable. Evaluate your selection using the following criteria.

* Beer's role in the mix. "The first step we take is an exercise to understand our total beverage strategy," said John Beck, vice president marketing at Bennigan's. "What is the role of beer, spirits, wine and non-alcoholic beverages? At Bennigan's, beer and spirits are category drivers. Wine is more of a convenience for guests."

Depending on the type of operation you run, beer can play a dominant or a supporting role. In a pub, beer is usually the beverage category driver, the operation's reason for being, in fact. In fine dining restaurants, wines and spirits usually take center stage, with beer playing a much less significant role.

"You have to understand what role the beer category will play in the operation," said Dennis Kamper, national on-premise category manager for Coors Brewing. "Knowing whether beer is a destination category or plays a routine role helps determine the breadth and depth of the category."

At the Horse Brass Pub in Portland, Ore., for example, good beer is considered a social lubricant, according to owner Don Younger. "What we try to do here is build a community of good beer drinkers," he said. With 49 taps, several of them devoted to rotating beers, the pub's customers come to drink craft and specialty beers. Younger doesn't carry brands like Heineken and Corona because they won't sell, and though he does more than $1 million in annual volume, he sells less than a keg a week of Budweiser.

Beer also is important at Cbammps Entertainment, Inc., Denver. Beer accounts for more than half of all beverage alcohol sales in Chammps units. Despite its importance, beer isn't even listed on the beverage menu, according to Tim Johnson, director of purchasing and beverage.

"About 70 to 75 percent of all the beer sold at a Chammps is one of the top four beers -- Bud, Bud Light, Miller Lite and Coors Light," he said. Since beer plays a more routine role at Chammps, Johnson bases his brand selection on different criteria. He looks for beers that he can promote across all Chammps units.

* Image. In addition to the role beer plays in the marketing mix, it also helps reinforce an operation's image or theme. Customers won't believe a Mexican restaurant is very authentic if it doesn't stock a variety of Mexican beers. That doesn't mean it can't carry Guinness or Budweiser, but image counts. An English style pub will carry an entirely different assortment of beers than a beach bar in Daytona.

* Marketplace trends. In large part, trends dictate what customers drink, which will influence what you carry. 'I don't pick the beers we carry," Younger said, "my customers do." That may be overly simplistic advice, but it's a good place to start.

"We look at consumer data in terms of what kind of beers they are drinking," said Angela Afflack, senior director beverage marketing and development at T.G.I. Friday's, Dallas. "It gives us an idea of the type of beers we ought to stock. We also look at trends: what are our competitors doing? And we take into account that some consumers are more experimental on-premise than off premise, so we consider beers they might not have tried."