21st Century Freddy Meyer

It has been interesting to watch craft beer take over more and more space in grocery stores. Once upon a time, you had to go to New Seasons or Whole Foods to find a decent selection of good beer...assuming you weren't planing to hit up a bottleshop like Belmont Station.

Although premium stores and bottleshops continue to do great job with craft beer, the game has changed in recent years. You can now find a reasonable selection of great beer in grocery stores, convenience stores and small neighborhood markets. In fact, craft beer sales in these channels are expanding rapidly.

Updated bomber row

So I've been curious about Fred Meyer, which has been mostly slow to turn the craft beer corner. This is particularly true of the Hollywood West location. Here's a store situated in an area that is thirsty for craft beer and wine. They've done a terrific job with wine in this store for many years. Beer, not so much.

There are surely reasons why beer played second fiddle at the Hollywood store. Space was likely one of them. The physical space dedicated to beer was relatively small for a store so large, limiting what they could stock. Lack of focus is another reason. This store has had a wine steward managing wine for many years and doing a fine job. That same person also managed craft beer...not an ideal arrangement.

Plenty of room for seasonal displays

Well, things have changed at the Hollywood store. The recent remodel, more or less complete, has provided roughly double the amount of space for beer. They now have a splendid selection of craft beer in 22 oz. bombers, cans and smaller bottles. They continue to carry a selection of macro sludge on one side of the aisle, but the craft side is where the action is. Plenty of it.

I cannot say what they've done about managing craft beer. I know they were looking for a beer steward a while back. Hopefully, they pulled the trigger on that because having someone with beer knowledge involved in the craft show is crucial to its ongoing success. Today's craft beer scene changes too rapidly for a wine person to successfully split duties.

Play the Game
Part of what drives the success of craft beer in bottleshops, pubs and stores is promotion of special releases and tastings via social media. It's the nature of the beast in this business. I'm not sure this approach is being used by the Kroger/Fred Meyer empire, but it definitely can be.

Jana of Powered by Yeast

Indeed, I visited the Hollywood store a couple of weeks ago after I saw a Facebook post announcing a mead tasting. This tasting was organized and hosted by Powered by Yeast, a beverage brand management company located in Portland.

Powered by Yeast is the husband and wife team of Tim and Jana Daisy-Ensign. Tim and Jana both have extensive experience in craft beer, wine and cider, and they represent a portfolio of brands that includes Fort George Brewing and Redstone Meadery.

Jana was tasting several Redstone meads, which were quite good. Events like this, when promoted via the right channels, can be a big success at the Hollywood store and beyond. Hopefully, there will be more of them happening.

Canning the Myths (About Cans)

There's been plenty of talk in recent times about the growing popularity of cans in craft beer. I've discussed the topic several times here. I was mostly concerned with the viability of cans as an alternative to glass. I continue to believe cans are a great packaging option for craft beer and that they will continue to gain share over the next few years.

Right container, wrong contents

When I wrote those prior posts, I was looking only at the growth factors. The numbers are pretty dramatic, showing off-the-hook increases. The graphs below show what's been happening and which segments are growing fastest, among other things. In case you're wondering, all of these graphs are based on information from the Brewers Association.

Growth Spurt
The two graphs below illustrate the growth of canned craft beer in two ways. First, you're looking at case sales growth. Next you're looking at the stripped down financials. These are fairly scary numbers. We are seeing a near doubling of numbers each year. I suspect these figures are convincing some brewers that moving to cans is a viable option.

Segment Stories
The graphic immediately below shows which packaging types are dominant. The bulk of the market is clearly owned by 12 oz cans, whether in packs of six or 12. I'm trying to recall seeing 12-packs of craft cans. I see lots of 6-packs, as well as 4-packs. But not so many half racks in cans. Oh well.

The next graphic shows where the growth is. The two segments with the smallest share of the can market turned in by far the greatest growth for 2011. The growing popularity of 16 oz cans is handily illustrated here. These numbers suggest that some craft brewers may see 16 oz cans as an alternative to 22 oz bottles. I can't run too far with that, but that's what I suspect. Meanwhile, 12 oz cans are competing with 12 oz bottles...which dominate the retail category.

Sobering Perspective
Understanding the place that cans have in craft beer means you have to know the size of the market. The Brewers Association says the retail craft beer market was worth $8.7 billion in 2011...representing a 15 percent increase over 2010. Rapid growth continues...you gotta love that.

Now for the shocking part...if you think cans are about to take over craft beer distribution. The graph below shows what share of the $8.7 billion market is owned by cans. The number is $11.5 million. In other words, barely a blip. Despite monstrous recent growth, which tends to warp perceptions, cans have a very long way to go before they become a serious player in the overall scheme of things. 

Just for fun, consider comparative numbers for 22 oz bottles: They own $44 million of the craft retail market. Bomber market share increased by 35 percent in 2011 and they remain a popular option for breweries and buyers. Yet 22 oz bottles account for only about 5 percent of overall retail sales. And cans represent about a fourth of bomber volume. Yikes!

Note: This post was updated on 9/21/2012 to correct a mistaken data point.