Burgeoning Dollar Store Channel Creates New Opportunities, Challenges For Beer Wholesalers

As U.S. retail channels continue to blur, beer is being offered in a wider array of outlets than ever before. Beer marketers and retailers applaud the opportunity that widening availability brings, but for beer wholesalers, benefits could be years down the road.

Discount or dollar stores have been among the most aggressive new retailers seeking permits to sell beer in recent years. Dollar General Corp., the rapidly expanding operator of some 10,200 stores in 40 states, has been receiving and petitioning for beer permits in numerous markets. Based in Goodlettsville, Tennessee, Dollar General has more retail locations in the U.S. than any other retailer, and plans to open some 625 new stores this year alone, located in suburban, rural and metropolitan communities. Another dollar-store concept, Matthews, North Carolina-based Family Dollar—with more than 7,200 locations in rural and urban settings across 45 states—has also taken on beer, and will open up to 500 new stores in its current fiscal year.

Despite the vast number of outlets, dollar stores aren’t yet posting big volume beer sales. Still, beer marketers have become enthralled with the channel, says Tom Fox, partner, CM Profit Group, a Detroit-based beer sales and marketing development firm. “Suppliers are driving the charge [behind dollar stores] to the dismay of many distributors,” Fox remarks.

Indeed, executives at both Anheuser-Busch and MillerCoors confirm that the channel has become an important one. “Expansion into the drug and dollar channels has proven very beneficial to brewers, including A-B,” says Chris Williams, vice president of national retail sales at Anheuser-Busch. “Not only has new distribution yielded more dollars, it has grown awareness around our products.” Kevin Doyle, chief customer officer at MillerCoors, says, “Dollar stores and other emerging retailers are an increasingly important part of the beer retail environment, and we expect this trend to continue. We’re working hard to help these retailers drive the size and value of their beer categories.”

Suppliers’ emphasis on the small but emerging channel has presented a challenge for some distributors. “We’re working closely with MillerCoors on emerging accounts” to ensure that they’re properly serviced and economically viable, says Frank Schwiep, CEO at Gold Coast Beverage Distributors in Florida. “There’s opportunity but the challenge is that right now they represent very low volume per account. We’re trying to figure out how to best service them now while also looking toward the future.”

Fox says beer wholesalers should focus on the future opportunities dollar stores offer rather than current small volume drops. “While dollar stores’ share of beer is very small today, in five years it could be a different picture,” he says, pointing to inroads that Walmart has made as a beer retailer. “Fifteen years ago, Walmart had a very small share of beer and distributors questioned why suppliers saw it as a big opportunity. Today, Walmart is massive.”

Tagged : Anheuser-Busch, beer, MillerCoors, retailers

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