How to Sell More Alcohol at Retail [Expert Interview]

John Ellsessar is a sales manager for Narragansett Beer, and has worked in the alcohol beverage industry for 36 years. John began his career in the alcohol industry with a college job managing a package store, then as an Anheuser-Busch college rep. Next, he began working in beverage distribution at Atlas Distributing, and has since worked for brands like Mike’s Hard and Mackenzie’s Hard Cider.

John has accumulated a unique perspective on the industry through his experience working in all levels of beverage merchandising, from managing mobile teams and negotiating with beer distributors, to purchasing beer as a retailer. Today, we sit down with John to hear his expertise on beverage merchandising, beer distributors, and relationships in retail.

Getting Started 

Q: Let’s start with the basics: What is the ground knowledge every alcohol beverage entrepreneur needs to understand in order to be successful?

John: The beverage industry runs on a three tier system. There’s the supplier, who manufactures the product. These suppliers sell to distributors, who in turn sell to retailers. Understanding and navigating these three levels is of the utmost importance.

Q: How can an entrepreneur successfully navigate these three levels?

John: You need to understand the relationships between the tiers. For example, distributors can represent multiple brands, and they have sales reps who go out and represent and sell all of their product to the retailers.

As a supplier, you want to influence the distributors to move more of your products as opposed to those of other brands. To do so, you can put on incentive contests, do promotions with them, or even go on store visits with the sales reps.

As a distributor, you definitely want to focus extra energy on big, volume-driving retail accounts. Especially if you’re a startup, it’s important to have good relationships with the retailers. When you’re a small brand, you need to put in extra effort to get your product on the shelves and in displays alongside the big brands, so these relationships are huge.

The Keys to Effective Alcohol Merchandising 

Q: How should managers train sales reps to be effective alcohol beverage merchandisers?

John: A good merchandiser is worth his weight in gold, because if you don’t effectively merchandise your products they aren’t going to sell. When I was an area manager it was my responsibility to train merchandisers, and I taught every single one the stoplight rule. It works on the green, yellow, red concept:

• A red light makes a customer stop and look at the product
• A yellow light just causes a customer to pause and look
• A green light is entirely ignored by the customer as they walk by.

All of your merchandising techniques should be aimed at creating a "red light" at your product. You want your displays, packaging, and promotions to catch the attention of consumers. The one merchandising technique that I really stress while training beverage merchandisers is listing price. You can’t create a red light without having your price posted and visible to your consumer.

 
Q: Walk me through what ideal merchandisers should do when they arrive at a store.

John: I organize beer merchandising into a process called the five spot rule. 

1. When reps pull up to a liquor store, they park and look at the outside of the store. The neon signs in the windows are the first point. Reps should ask themselves: Do we have neon signs in the windows? Do we have more or less than our competitors?
2. The second point is banners in the windows. Reps needs to ask: Are we advertising products in the windows with banners? Are we advertising for beer, liquor, or both? What are our competitors advertising for? 
3. Then reps walk into the store. Point three is also called the first impact area - what customers see when they first enter the store. Reps should ask: Do we have anything in eyesight from the door? Do our competitors?
4.  Next, reps needs to go to the cooler. The coolers organize competing products side by side, so their brand needs to have a good showing. Reps should take note of: How many doors do we have? How many do our competitors have?
5. Point five is the checkout area. This is where you want to capitalize on waiting time and impulse buys. While customers wait in line, they are going to look around. Reps need to focus on displays and promotions that can be seen from the counter or the checkout line. They should think: Is there a placemat for change? A wraparound graphic on the counter? Signs behind the counter? They should also try to get placement for their brand’s newest product near the counter. This way, customers can familiarize themselves with the product while they wait in line.

To view this checklist as an infographic, click here!

Q: Which of these points is the most important? What action should a beer merchandiser take if they find a point that is clearly failing?

John:  The cooler is of huge importance. Whether the retail location is a tiny convenience store or a huge liquor store, the most beer is sold cold out of the cooler. If your brand isn’t winning at the cooler, your sales are going to suffer. When a field rep finds a situation where their brand is losing at the cooler, the area manager needs to meet with the rep and put a program together to increase cooler effectiveness. This program could focus on working to improve the retailer relationship or bargaining for more cooler space.

Setting Your Brand up For Success 

Q: What should a beverage entrepreneur think about when pricing product?

John: As a supplier, you should create a pricing hierarchy. For beer, there are generally three levels: high-end craft and import beer, premium beer, and budget beer. You want your price, your product, and the way you market that product to all line up.

Demographics play into which level of beer you want to sell to which retailer. If a retailer is in a college town or a low-income neighborhood, you want stock it mostly with your budget beer. Retailers in wealthier areas should be stocked with more of the high-end and premium beers.

Q: Summer is seen as the best season for beer and liquor sales. How can a merchandiser prepare for this season?

John: Winning the summer comes down to planning and forecasting. In October, you want to have the previous summer wrapped up and analyzed for improvement. As you reach January and February, the slow season in beer, you should spend time getting your coolers reset and running through your inventory.

The slow season is a great time to work with your retailers and establish good relationships with them. You should lay out a goal for sales with each retailer, and lay out a plan to reach that goal. By the time summer comes, you will be ready to succeed.

Q: What is your advice for an upcoming alcohol beverage entrepreneur?

John: Figure out who you want your brand to be, and then stay with that identity. Quality and consistency are key. Also: If you’re looking for a quick return on your investment, this is the wrong business for you. After you make your product, you need to put substantial effort into developing relationships with your distributors and your retailers in order to reach success.