How a national brewer optimized and cultivated a successful assortment in the craft beer category, increasing revenue and market share
The most important months for alcohol sales are underway. From Memorial Day to Labor Day, retailers see the largest percentage of sales in beer and alcohol. To capitalize on that demand, however, retailers rely on their beer partners to deliver the most profitable assortment available.
The craft beer sector can be one of the most complex categories, requiring a retailer to choose among hundreds of unique breweries local to their stores; then there are thousands of regional breweries and national craft companies. Next, how many IPAs should be carried? What about sours, stouts, pilsners, maybe a gose with hibiscus or a near-beer pale ale? How many four-packs, singles or cases? Cans or bottles? The options are seemingly endless.
Factoring in the importance of the summer — the National Beer Wholesalers Association ranks the top three beer holidays as Independence Day, Memorial Day and Labor Day — retailers need powerful insights that deliver reliable visibility into seasonal trends like summer.
Beer brands need to help retailers measure the price elasticity of craft beer in the summer and perfect assortments to take advantage of summer habits, trends and taste profiles. Insite AI and precise predictive modeling can set brands up to lead the way.
In this blog, we explore further through a national brewery client that optimized an assortment for two national specialty retailers, resulting in an increase of sales of nearly 3% for the craft beer category, growing annual revenue by $20 million.
Understanding the Complexity of Craft Beer
Year after year, the total number of craft breweries entering the U.S. market continues to climb. But is there enough space for them? Or, better yet, how can we truly expect a retailer to know what to put on the shelf or in the cold vault?
In the problem of too much beer, we worked with a national brewer to optimize assortments at two national specialty retailers, one with 300 stores and another with 500. As a result, it was the first time the national brewer had been awarded a category captaincy to help rein in and optimize assortments.
For both chains, the brewer helped make the most out of the retailers’ craft beer shelf space, something incredibly important for the big four months. The National Beer Wholesalers Association has reported summer beer sales represent anywhere from 20-40% of a company’s sales.
Driving Revenue and Market Share
Working with the national brewer, we leveraged AI-powered predictive analytics at a store-by-store level, as opposed to store clusters.
Every store came with unique space constraints and localized options to consider. With Insite AI, the brewer was able to take multiple sources of unstructured data and deliver granular insights to help the brand forecast performance over a two-year period. Insite AI deployed targeted assortment capabilities inside the brand’s cloud environment to analyze key data points across multiple retailer accounts. Insite AI then applied sophisticated models that delivered visibility into areas of growth and decline, and predicted innovation trends.
They quickly delivered critical insights on demand transference. The platform highlighted the incrementality associated with new products to add to an assortment, suggested what to remove, and looked at other market factors.
For the national brewer, the modeling led to huge success for the two retailers, generating:
- A 3% lift in sales above “business as usual.”
- $20 million in annual revenue increases for the retailers.
- Significant market share gain.
These numbers are significant for a category where retailers are looking to pull back on inventory and players in the space. It is more important than ever for brands to become trusted and credible thought partners to their retailers with business planning and decision-making.
With Insite AI, the brewer can now create multiple assortments within seconds and recommend the best one for its retailer partners. Alongside the consulting engagement, they provide an AI model that is continuously learning so brands can deliver updates to optimally run the category and maintain a captainship.
Building Better Assortments
Brands across the CPG space can refine and optimize assortments, space planning and trade promotions through AI modeling. Machine learning distills the months of manual work required to understand movements and trends within a category to minutes. AI serves as an accelerant to internal teams and ways of working.
To see how AI can lift your brand, contact us here.