He reiterated the company's goal of doubling beer sales in the
next three years. "I see it as a layup. My team sees it as a big
half-court shot. But I'm telling you, it's there," he said during
his talk, which was interrupted several times by applause from the
crowd of nearly 4,000 beer distributors and suppliers attending the
event.
The positive response is a welcome sign for Walmart, which has
had an uneasy relationship with distributors, who have complained
about the complexities of servicing Walmart stores. Because they
use "just-in-time" ordering systems, "their backrooms have no
storage," David Black, CEO of Northeast Sales Distributing, said in
an interview. His company's territory includes some 50 Walmarts in
portions of Georgia and North Carolina. "They refuse the order or
they make you sit there for three hours while they take something
else."
Mr. Mac Naughton acknowledged that it's "hard to sell beer to
Walmart," but said the company was working to improve product flow
while securing more dedicated storage space for beer. To date, most
of the company's efforts have involved making beer displays more
prominent in stores, while adding more refrigeration, hiring more
alcohol buyers and plugging beer in circulars.
No private label
Walmart began efforts to improve its relationship with beer
wholesalers in September of 2012 when it held an "adult beverage
summit" at a Sam's Club in its home base of Betonville, Ark., which
drew some 500 alcohol industry representatives,
Bloomberg News recently reported.
It was at this meeting when Walmart first pledged to double beer
sales. As Bloomberg
reported earlier this month, the retailer's strategy includes
steep discounting, with beer sold nearly at cost in some stores.
When it does so, the Walmart eats into its own profit margin,
leaving distributors mostly unharmed. Still, wholesalers have to
"hear the rhetoric coming back from Walmart's competitors that
don't want to go that cheap," Mr. Black said.
In his presentation this week, Mr. Mac Naughton said Walmart
would continue its strategy of "price separation," but did not
directly address the topic of selling beer nearly at cost.
He pleased distributors by saying the retailer has no plans to
go into private-label beer, as it has done in other grocery
categories. He also called on wholesalers to help the company with
beer displays. "We don't want cute displays, "he said. "We want
'shoppable' displays: item and price and can I get a case off the
top. Sometimes we kid ourselves with pretty. Pretty is fun, but I
want sales."
