Walmart is already the largest beer retailer in the US (yes, really — it seems to be the top of mind choice when people want to buy a cheap kid’s toy, groceries, a gun, and some brews all in one place), but beer distributors haven’t exactly found the company easy to work with in the past.
Because the retailer generally orders new stock just in time, “their backrooms have no storage,” said David Black, CEO of Northeast Sales Distributing, in an interview with AdAge. “They refuse the order or they make you sit there for three hours while they take something else.”
According to Walmart Chief Merchandising and Marketing Officer Duncan Mac Naughton, however, all that is about to change.
At a recent National Beer Wholesalers Association meeting in Las Vegas, Mac Naughton reiterated his company’s plan to double beer sales in the next three years, noting that Walmart is still “under-shared” in beer sales compared with competitors. While he aknowledged that it’s been “hard to sell beer to Walmart,” he said the company was working to improve product flow while securing more dedicated storage space for beer.
“I see it as a layup,” he told the group of over 4,000 distributors. “My team sees it as a big half-court shot. But I’m telling you, it’s there,” he said. His comments received a warm reception and plenty of applause — a good sign that this could be the start of a less strained relationship between Walmart and beer distributors.
While these logistical improvements should help, Mac Naughton did not address another issue that has caused some strife between the company and its distributors. Part of the strategy that has already helped Walmart triple its alcohol sales over the past decade, has been to steeply discount the price of beer, sometimes selling it nearly at cost. While this cuts into the retailer’s own profit margins and does not directly affect the distributors, it has caused them some headaches indirectly. When Walmart sells beer at such a low price, wholesalers have to “hear the rhetoric coming back from Walmart’s competitors that don’t want to go that cheap,” said Mr. Black.
Mac Naughton did, however, please distributors when he assured them that Walmart has no plans to sell private-label beer. He also reiterated that wholesalers can help bolster sales by helping to organize better store 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.”