Brands asked to pay for positioning in stores.
If your drink of choice hails from a craft beer label or a small vineyard, you might soon have trouble finding it at the supermarket.
Kroger Co., one of the world’s largest grocery chains, has proposed a plan that would let a private distributor oversee how much prominence brands get in stores, the Wall Street Journal reported. What’s more, the alcohol companies will be asked to pay for the services of the distributor. This is a big shift from the previous system, in which the largest alcohol producers (like beer giant Anheuser-Busch InBev NV) used their role as “category captains” to dole out advice about how much shelf space to give various alcohol labels.
The proposed change is particularly worrisome for smaller labels, since it could be more of a burden on them to find money to pay the distributor, Southern Wine & Spirits, for placement in stores. The new system would also implement a voluntary quarterly fee for alcohol producers, based partially on how much volume a store carries.
Kroger, however, thinks the plan will allow it to rearrange store shelves more frequently to better represent consumer preferences, like seasonal wines and trending craft beer brands. The company says it now makes these changes inconsistently across its more than 2,600 stores nationwide. A prominent position in the store can drive strong sales, whereas sales are likely to plummet if a beer or wine brand is tucked away in the corner of the store with little foot traffic.
If Kroger’s plan is approved, “what stops every other grocer from doing the same thing?” Paul Gatza, director of craft beer organization Brewers Association, told WSJ. “Then it costs a lot of money to get on the shelves.”
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However, Kroger says the change simply means that Southern will provide “unbiased” direction based on customer data, according to Keith Dailey, the company’s director of media relations/corporate communications.
Southern said other retailers have expressed interest in the program, though it declined to comment on specific chains that have been asking about it.