Coming soon to your local Walmart: more craft beer.
In another sign that the fast-growing segment is going mainstream, the nation's largest company and biggest beer seller is planning to add shelf space to accommodate more craft brews, former Walmart CEO Lee Scott told distributors this week at their annual convention in Las Vegas. Mr. Scott, who retired as CEO in 2009 but still serves on the board, said he recently talked to a top Walmart official who is "clearly is in line with the fact we've got to make more space, we have to have more representation on assortment."
Walmart, Mr. Scott added, "built the company on two things: One was price, but the other was assortment, and you can't take an area like beer where people are moving to craft and 'under-assort' yourself because the person who is buying craft beer and wants that assortment will drive to Kroger and pay the 15% more."
Mr. Scott, a featured speaker at the National Beer Wholesalers Association event at Caesar's Palace, said that local store managers will have a big say in which new beers will be stocked where. "I'll tell you how it happens at Walmart: You have a 26-year-old buyer who makes the decision. The vice president is supposed to do a walk-through with them on why did you do this how did you do it." But "it is the buyer who is making that decision on those individual stores."
While craft beer still only commands about 5% of the beer market, these smaller, mostly regional brands are the only bright spot in beer, growing at a 14% clip compared with a 2% decline in the overall beer category, experts said at the convention. At this point, no one expects craft to overtake big brands, but there's still plenty of room for more growth.
Small breweries are coming online at a record pace. In 2010 a total of 1,753 breweries of all sizes operated for some or all of the year, the highest total since the late 1800s, according to the Brewers Association.
"Anyone who thinks this has peaked, we've maxed it out totally, I got news for ya -- not yet," Beer Marketers Insights president Benj Steinman told distributors. "Of course there is a theoretical limit and it is going to separate more out into winners and losers over time. But this is a trend that right now has the wind at its back."
Indeed, craft was a star at this week's convention, attended by some 3,500 beer industry professionals. The "Craft Brewer's Pavilion," tucked in the corner of the trade-show floor, was heavily trafficked, as brewers such as Allagash Brewing Co. from Maine and Stone Brewing Co. from California showed off their products. Of course, the big guys are also trying to get in on the action, putting more focus on their own smaller brands, such as Blue Moon by MillerCoors and Shock Top by Anheuser-Busch InBev. And now, they will all be slugging it out for more space at Walmart.