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R&IEditorial Archives2005June 1 — Beverage

Domestic Rules
Local loyalties are powerful factors in consumers’ beer choices.

Brewers cultivate budget-minded young drinkers with lower-price “economy brands.”

Mexican tap beers outsell other imports at Houston units of Buffalo’s Southwest Cafes.

Dunlays on Clark, sales quantity compensates for draft beers’ lower menu price.

Regional brands fuel heart-thumping loyalty in some beer-lovers while others swear allegiance to national powerhouses or find allure in imports. Light and low-carb styles are winning converts as well. Anticipating what will sell best is part of the customer analysis every operator with a liquor license learns to conduct.

“What drinkers buy depends on their locale and how much change is in their pocket,’’ says John Hinz, senior director of marketing for 322-unit Buffalo Wild Wings Grill & Bar, based in Minneapolis. A Texas beer, heavily marketed in the state at sports events and promoted in bars, outsells all other domestic brews on tap at its 28 Texas locations, says Hinz.

A beer produced and marketed in Georgia outsells all other domestics at Buffalo’s Southwest Cafes in the state. The 50-unit, Marietta, Ga.-based chain watched the brewer launch a marketing blitz—with advertising messages on television and Internet sites and at sports and music venues—that caught the attention of young customers, says Shaun Curtis, the chain’s corporate executive chef. In response, Buffalo’s Atlanta units dropped the price for a pint of the local brew from the $4 charged for microbrews and imports to $3 to capitalize on the brand’s growing popularity.

At its Houston units, Mexican draft beers compete with a favorite Texas brew. Both outsell other imports and domestic super-premiums (including small-batch micros and handcrafted beers), says Curtis. A large Mexican-American population and locals’ loyalty to all things Texan help explain brisk sales of Mexican and local brands.

State Street Brats, a sports bar in Madison, Wis., markets “Wisconsin on tap” with 11 of 18 beers from the state; the most-popular drafts are Wisconsin-brewed. Menu favorites such as bratwurst with grilled onions capitalize on the regionalism. “This is University of Wisconsin country. Customers are rabid about the state’s teams and beers,’’ says owner Kelly Meuer.

Demographic Divide
At the four Chicago restaurants co-owned by Doug Dunlay, demographic differences in beer preference often are dramatic. Customers at 2-year-old Dunlays on Clark—a “neighborhood American grill” on the city’s north side—include “tons of young singles fresh out of college,” Dunlay says, along with professional couples and a few upper-middle-class families. “The college crowd buys draft beers because of the lower price and drink in greater quantity. Older customers order more wine than beer at the Clark Street location.”

Dunlays on the Square in Chicago’s ethnically diverse Logan Square neighborhood draws residents of Mexican, Cuban and European descent. Many are third-generation Chicago families, artists, boutique owners and older professionals. Their tastes are more discerning, Dunlay contends. The 5-month-old restaurant offers nine draft choices and 12 in bottles. Beer doubles wine sales at this location. “These customers are into taste, not consumption. They’re willing to pay more for imports and microbrews,’’ he explains.

Suds Cycles
Changing demographics have affected marketing strategies by operators as well as brewers. Although light and low-carb beers are increasing in sales, total U.S. beer consumption dipped 0.6% in 2003, according to Norwalk, Conn.-based Adams Beverage Group. Per-capita beer consumption among adults 21 and older declined 14% between 1988 and 2000, according to the Washington, D.C.-based Beer Institute, as many baby boomers moved from beer to wine as social beverage of choice.

Average number of beers consumed per month by those who favor light beers, versus five per month by regular-beer drinkers.
(Mintel International Group)

That makes cultivating younger drinkers increasingly important for brewers, who are marketing lower-price “economy brands” to this often budget-minded age group. These consumers have the highest purchase frequency (8.1 retail-purchase-occasions per year versus 5.3 for mainstream customers), according to Dave Dixon, director of economy brands for a Milwaukee-based brewer. The low-price segment represents 25% of industry volume.

Food Links
Beer and food can be easily and profitably cross-sold, says Bill Rizzuto. The owner of Rizzuto’s Wood-Fired Pizza Kitchen in Bethel, Conn., can double beer sales with suggestive selling of menu items, often pairing beers with daily specials. “If we offer basil-chicken pizza and suggest a specific ale, or pair an entrée salad with an Irish stout, it sells. Guests like to learn how to match beer with foods,’’ he says.

Rizzuto’s male customers drive beer sales and are fiercely loyal to regional beers, especially those that are Boston-brewed. Though some imports are menued—namely stouts, lagers and ales from Europe—75% of beer sales are domestic.

The 73-unit Old Chicago casual-dining chain based in Louisville, Colo., conducts its Around the World promotion every spring. This year’s four-week event combines eight thin-crust pizzas with an equal number of beer brands, including domestics and imports.

Toppings on the Northern Lights pizza, for example, include Canadian bacon, green and yellow bell peppers, Alfredo sauce and three cheeses. Its suggested accompaniment is a Canadian beer.

Winning Combinations
Contests and food tie-ins are naturals for boosting beer sales.

  • Every Tuesday at State Street Brats, Madison, Wis., bartenders and customers are invited to flip a coin. If the customer calls it right, a 75% discount applies for one round of drinks. Beverage sales increased 30% on Tuesdays since its inception four years ago, says owner Kelly Meuer.
  • Every Tuesday at the Buffalo’s Southwest Cafe unit in Greendale, Ind., chicken wings sell for 35 cents each. Beers are priced at $2 to $4 depending on brand. Beer and wing sales double, according to General Manager Pam Ballman.

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