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Burgeoning Bottle Shop Segment Offers “New Generation” In Beer Retailing

April 12, 2013

In markets across the country, bottle shops—retail stores with a big focus on pricey craft and imported beers—are booming. “They’re the new generation of retailer,” explains Matthias Neidhart, president of specialty beer importer B. United International. Neidhart adds that the emergence of bottle shops is due to consumer demand for craft and artisanal beers that often aren’t stocked by mass merchandisers. Matt Bonney, co-owner of Bottleworks in Seattle, agrees. “Consumers are getting more educated. They want to buy beer in a store that specializes in it,” he says, comparing them to wine connoisseurs who seek out fine wine shops.

Bonney says Seattle has become so saturated with bottle shops that “it would be hard to find a neighborhood that doesn’t have one.” But in 1999, when he opened Bottleworks, he was a pioneer of the channel. His 1,700-square-foot store has grown to offer nearly 1,000 different beers, including cellared vintage brews, and regular in-store tasting events. Bottleworks also features nine beers on draft for on-premise consumption or carryout growlers. While Bonney is grateful that many of the store’s early customers are still loyal patrons, he concedes that just as it was 14 years ago, “bottle shop margins are still tough.”

Bruisin’ Ales of Asheville, North Carolina, is considered one of the best bottle shops in the country. “We launched Bruisin’ Ales in 2006 because we wanted to open a store where we, as beer fans, would want to shop,” explains co-owner Julie Atallah. Bruisin’ Ales, just 900 square feet, stocks about 1,000 different brews, which are constantly rotated. Prices range from $1.50 to $325 a bottle, and selections focus on Belgian, Belgian-style and esoteric American craft beers.

“Bottle shops are becoming a huge trend in Pennsylvania,” says Mark Sablowsky, owner of the four-year-old Craft Beer Outlet in Philadelphia, which stocks about 1,000 different beers ($1.69 to $29.99 a bottle), including imports, crafts and even premium-priced domestics. “There’s still a market for brands like Budweiser,” he explains. “I see no point in turning those people away.” In fact, Sablowsky says, it’s not unusual for a customer designing his own six-pack to mix in a bottle of Coors Light with brews from Dogfish Head or Stone Brewing Co. Sablowsky notes that Craft Beer Outlet is technically a deli—a designation which allows it to sell beer in six- and 12-packs.

Most bottle shops don’t stock wine or distilled spirits, even when local laws allow it. “I want to focus totally on beer,” says Craig Wathen, co-owner of City Beer Store in San Francisco. Similarly, 95% of Bruisin’ Ales’ sales come from beer, with the remainder coming from glassware, T-shirts, books and other beer-related items. But some bottle shops are open to other categories. While Bottleworks doesn’t offer wine or spirits, Bonney says he’d like to sell high-end Bourbon or Tequila if Washington State laws are revised to allow for the sale of other drinks types in his store.

Neidhart of B. United says that with continued growth of craft beer anticipated, “there is so much potential for bottle shops.” And with their penchant for educating customers, he adds, “bottle shops will force traditional package stores to step up their game.”

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