Over the years, the number of craft brewers in Michigan has grown significantly. And even though this is very good for craft beer lovers in Michigan it is actually very bad for craft brewers as it increases competition in the market.
All the craft brewers are fighting to capitalize on market share and to get their products on the shelves of a grocery store.
“It’s becoming increasingly more competitive as we have grown the number of breweries in the state,” said Rich O’Keefe, senior beer buyer at Meijer. “Today it’s nearly impossible to bring in all craft brewers to every store in our locations.”
So many craft brewers in Michigan will not be able to get their beer in the grocery stores and this could really harm businesses. This problem is especially rampant in Grand Rapids (Beer City USA) where the number of craft breweries has tripled since 2011.
“There are significantly more Michigan craft brewers, items by brewers and national craft brewers than other areas of the store – and all are vying for valuable positions,” said Larry Pierce, executive vice president of merchandising and marketing for SpartanNash. Some of the stores under SpartanNash are D&W, Family Fare, Forest Hills Foods, VG’s and Valu Land.
Many grocery stores are now forced to be a lot more thorough when choosing which new beers to put on their shelves.
One of the first things that stores are looking for before buying a beer is “established demand”. This can also be greatly supplemented by social media buzz. Stores like Meijer, only choose beers that people already want to buy. Meijer currently has 53 Michigan brewed beer on their shelves out of the 177 craft beers in their selection.
“Especially in Michigan, we are seeing new breweries pop up all the time, and in an already competitive market, it’s all about the demand from our store guests,” Pierce said.
The second thing that stores are looking for is a brewery’s capacity to supply the “established demand”.
SpartanNash hires craft beer experts to investigate whether or not a brewery can brew enough beer to distribute.
“We look at how well the brewer is doing in their existing neighborhood, and we listen for any buzz that is being generated by our customers in our stores and through social media,” Pierce said. “We also look at scores from the beer rating entities like Untappd and Next Glass.”
O’Keefe asks brewers what makes their beer so special?
“One of the first questions I ask is, ‘Why does a retailer need you in their store?'” O’Keefe said. “‘What are you adding?'”
Both Meijer and SpartNash open up their shelves to local craft brewers to support the local market but there are limits on the amount of local beer they can put on their shelves.
“We have really focused on building a local orientation with our craft brewers and we continue to do that today – it’s just become a point of saturation,” O’Keefe said. “And it’s a question of, what is the right brewer for our locations?”
Michigan attracts a lot of brewers around the world
But supersaturation of local brewers isn’t the only problem for grocery stores. There is also a hoard of national and international brands trying to get in on Michigan’s beer-heavy market.
“I have received in the last two months more calls from European beer companies than in the last several years,” O’Keefe said. “They want to get into the Midwest market.”
Local craft beer sales make up 34 percent of Meijer’s beer sales and 20 percent of SpartanNash’s. It is a massive business for the two companies and SpartanNash is planning to increase its craft selection by adding cold beer space to 12 of its Michigan stores this year.
“It’s important that the craft brewers of today and tomorrow have a strong plan on what their growth plan is for their brewery and in the state,” O’Keefe said. “You can no longer expect that just because you’re a local craft brewer that you’re going to get into the store. You need to develop a plan to how to develop your brand in the market so the retailer sees the need.”