NEW YORK – Walmart is focusing “as never before on beer,” Bloomberg reports, a U.S. category worth roughly $45 billion.
According to attendees at a Sam’s Club meeting last September with representatives from the beer industry, Chief Merchandising Officer Duncan Mac Naughton said the company wanted to double its beer sales by 2016. In the past 11 months, it has made significant progress towards its goal.
“We’re seeing dramatic increases in sales,” said Steve Bailey, who attended the summit as vice president of chain accounts for Columbia Distributing, which supplies beer to about 90 Wal-Mart stores in Washington and Oregon. That “has pushed us to pay more attention to Wal-Mart.”
Walmart has even begun promoting alcohol in its circulars, reversing a previous ban.
“Focusing on adult beverage is a decision we made this year,” said Deisha Barnett, a Walmart spokeswoman. “Feedback has been very positive” and the relationship with distributors “has been very collaborative.”
Walmart’s alcohol push is likely to pressure “entrenched players,” Bloomberg speculated, like convenience stores, Costco, and dollar stores.
As part of the company’s beer push, Walmart has implemented a three-prong strategy: devoting more shelf space to alcohol, discounting it whenever possible, and hiring more alcohol buyers.
“In the past, the Walmart buyer didn’t know us,” Bailey said. “Now they’re just an e-mail or a phone call away. We can interact daily.”
Ron Newsad, a distributor for Dayton, Ohio-based Heidelberg Distributing Co., said state regulations prevent Walmart from discounting alcohol in his territory. However, the company has been giving away mail-in-rebates and $10 store gift cards — both paid by the beer companies — when shoppers purchase beer with cross-promoted merchandise.
Amy Baldwin, a marketing director for Mobile, Alabama-based Gulf Distributing Holdings LLC, said Walmart is designing new stores to highlight beer.
“They’re redesigning stores to have adult beverage in a more appealing position in the front of the store near produce,” Baldwin said.
As a result, alcohol manufacturers, including Heineken, are expanding their presence in Bentonville, said Cameron Smith, who works closely with Walmart’s supplier network.
“They’ve said they want to be the number-one beer seller in the world,” Smith said. “They’re getting there quick. Everyone in the supplier community is on cloud nine, riding high and adding to their staff.