Brewers Association

Too Many Craft SKUs?

It is the Friday of Memorial Day weekend. All over America people are heading into liquor stores, grocery stores, convenience stores and other retailers to buy beer for the holiday weekend. Many of the store shelves will have beautiful selections and lots of choices for the the modern beer drinker who seeks diverse, flavorful beers. One question that is asked in back rooms of retailers, wholesalers and large breweries is "are there too many SKUs?"

SKU is shorthand for "stock keeping unit" and refers to the different packages available by brand and quantity and type. Bump Williams, who coincidentally works for Bump Williams Consulting, noted at the Beer Business Daily Summit that the number of craft brands that are scanned at retailers grew 19 % in 2009 to 1,394. Craft SKUs climbed 15 % to 2,271. The number of cases per SKU, however, declined 0.5 %.  Only 172 SKUs make up 80 % of scanned volume.

Jeff Nowicki presented on whether this is a problem for craft brewers and retailers during the panel presentation on SKU proliferation at the Craft Brewers Conference in Chicago. One tactic, Jeff noted that larger beer, wine and spirits competitors may employ to attempt to get retailers to reduce shelf space for craft is to show data on how dollars per point of distribution is shrinking for some craft brands. Jeff notes that this is actually healthy, as craft brands hit more distribution points by extending deeper in a territory into smaller stores, those average dollars per distribution point logically declines and shows absolutely nothing unheathy about the craft brands. Retailers are continuing to grow their craft portfolios and making more money through craft.

Another way to phrase the question is "are there too many on the bus?" Nowicki answered " From a retail perspective there are not too many on the bus, and here's the reason why. This category brings innovation, excitement, variety, cross-category opportunity...There are a lot of positives. There's a lot of new opportunities, and new drinkers being brought into the categories."

A well stocked craft shelf makes money for retailers and also says something about the image of a store. There are good reasons for the increase in craft SKUs.

--Paul Gatza

 

 

 

 

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