Do Breweries Pay Display Fees?

I recommend watching Beer Wars. It's a documentary about craft beer that also talks about this exact thing. You ought to be able to find it on Netflix- long story short, product placement is a huge, huge issue when it comes to selling beer. And some of the big boys (in the documentary, this means BMC and their distributors- which BMC also usually owns) do what they can to squeeze everyone else out.

Also, product placement (as with the rest of marketing) plays on your subconscious thinking. I think it affects all of us, whether we like to admit it or not.

 

Breweries and distributors (along with anyone else looking to sell in a grocery store or similar setting) will face different pricing or deals depending on where they are stocked. As you noticed, eye level tends to sell best. Next time you go, see which beers are located closer to the ends of the aisle vs. the middle-stores will try to put brands with higher sales volume in the middle of aisles to encourage customers to walk the whole length (also known as fighting the "boomerang effect), while brands/breweries will fight for end-of-aisle displays to catch the eye of customers walking by. One of those interesting things you can't un-see.

 

while they do not pay stores or bars fees (legally) they do come in and "advise" that their particular beer be positioned at eye level as that has proven to provide the most sales for that particular product.

Also, I agree that putting certain products in certain areas is beneficial but I also think that it doesn't matter where you put things that sell like crazy because they are going to sell regardless of where they are. Putting something that is less known is a very "shoppable" spot like eye level will get it much more attention.

 

You are correct to an extent. If you put the top sellers on the bottom you WILL lose some sales and if you put the slow sellers at eye level you will gain sales on that product. Overall though I have found you will lose much more than you gain with this approach.

 

Since I wear XL & XXL sizes and have to look for them on bottom shelves all the time, I have trained myself to look everywhere when I shop, whether for beer, clothing, food or whatever. The moral of the story is: train yourself to do this as well and you will have taken the first step in controlling your own purchasing habits, instead of slick marketing having control over those habits.

 

It's the distributor's/salesman's job to get that placement, and there's more research behind this than you can imagine. The short of it is this:

• high-priced items go on the top shelf ($12+)
• high-volume and new items go eye-level; the closer to the handle of the door the better, the better it sells
• brand loyal items go below that; Sierra Nevada, New Belgium, Lost Coast, etc. things people are familiar with and/or have already made up their mind before entering the store

Breweries don't pay for it directly, but the distributors do - kind of. It's important to understand wine and spirit laws for this. Wine and spirits can be incentivized for volume purchases: buy 3 cases and get 1 free. These decisions can be made at the discretion of the distributor, whenever they want. Laws don't allow distributors to do this with beer. For whatever reason, beer is different from wine and spirits because all sales must be decided on and posted months before the beer goes on sale through the distributor (it's usually about $1 - $2 off each case for a month).

Now, let's say you walk into a Whole Foods and see a huge stack of New Belgium products, or maybe a pallet of Kona Longboard. Whoever sold that in 'paid' for that stack in cases of beer. Usually it's something like, "Hey, let's stick a 30-case stack of our products over there with some cool cheeses. If you can make it happen, I'll hook you up with 6 cases, free." This is all done under the table because free cases of beer can't be invoiced, it's illegal. This helps distributors meet volume goals, it allows retailers (big and small) to get competitive with their pricing, and it usually lowers the price for the consumer.

You're kidding yourself if you think the BMC guys are the only ones doing this. I'd venture to guess that 95% of stacked beer that you see was bought, by the distributor, with free cases of beer. That includes your favorite imports, and adored American craft.

 

I scan and check all areas and shelves it pays Tuesday evening I found a 4pack of Old Coast old ale from 2012 behind a few 2013 packs.

 

You don't "pay Whole Foods". You give Whole Foods a 40 cent discount. Same with how distributors work. Think it like that.


I think it's really awesome that at my local shop, when the semi limited releases come in they kind of hide it in really weird places to see how after it people really are. The beer guy will even be like "Wow! You didn't even have to ask where I put that one."

 

That's interesting. The shop I go to I feel goes out of their way to put the big boys (around here; Bells, Founders, etc.) on the bottom. I guess they feel that people will find those no matter what and they are trying to give some of the smaller guys a shot. Pretty cool if that's the reason.

 

I know at the store I shop at, the cashier table is immediately to the left, and then the beer fridges are all along the wall on the left past that. The cold wines are in the first fridge as it started as a wine/spirits store, then the bombers, then the seasonals, and then all the other beer, mostly segregated by the country it came from. All macros are buried in the back left corner fridge.

 

It benefits the retailer to put the pricier beers at eye-level. Why try to sell a Schmaltz when you can sell a Stone for twice as much?

(Sidenote: when working in retail - Whole Foods - I learned that "color blocking" was important as well. The eye naturally moves from left to right, and will stop when it gets to a dark color. So it's best to arrange things in order from light to dark so the consumer looks at everything.)

 

I love my Whole Foods for their BMC placement, a couple skus all the way in the bottom right corner of the shelves. But my go to Mom and Pop bottle shop doesn't carry BMC, and I appreciate their stance on that.

For me though, I look everywhere....from top to bottom....I don't want to miss anything.

 

I do the same for any type shopping! I believe that I do not shop because I have to but for the enjoyment and discovery of new things.

 

The way beer is arranged on a shelf, cold box, etc is called a shelf set. Typically your smaller independent stores will do their own shelf sets, but that isn't always the case. A lot of bigger chains like grocery stores and gas stations effectively outsource their shelf sets to distributors. The distributor that controls the shelf set is called the "Set Captain". The captain develops a proposed set and takes it into a meeting with reps from the chain and other distributors. They argue over product placements for hours over coffee and doughnuts, ultimately coming to a compromise. Then a reset is scheduled and reps from all the interested distributors meet at the chain location with the local manager and rearrange everything. This typically happens once or twice a year. Some (very few) chain companies have traveling contractors who do all their resets. The brewery is not really involved at all, though I know for a fact that the BMCs monitor their share of shelf space and tie that into distributor performance along with other metrics like volume, share of taps, displays, etc.

Source: I work at a distributor on shelf set/tracking software and I've seen Beer Wars no less than 10 times.