Celebrating Craft - Local Industry Seeks To Improve In-Store Marketing and Product Placement in Government Liquor Stores

The recent amendment of the Liquor Control and Licensing Act (Act) signalled an important step in the modernization of BC’s antiquated liquor laws. With plans to table a new Act next spring, and ongoing discussions occurring between government and industry groups, it’s clear that the process started by the creation and release of the “BC Liquor Policy Review Final Report” (Report) is gaining momentum.  

Like the government’s pledge to work with industry and tourism associations to promote craft beer tourism, the Report contains a number of recommendations that can be implemented without legislative or regulatory changes. Improved product placement and in-store marketing for BC craft beer in Liquor Distribution Branch (LDB) retail stores (Government Liquor Stores, or GLSs) is one of them. Specifically, recommendation # 23 provides that the LDB “should improve its marketing of BC liquor products in stores, developing new opportunities for product placement and innovative promotional and educational materials.”  

While licensee retail stores give BC’s craft brewers an excellent distribution channel for seasonal and other limited releases (and provide a great service to consumers for the same reason), the purchasing power and scope of the LDB make it a vital tool and a key ally as the industry continues to expand its market share. As Matt Phillips, Owner and Brewmaster of Victoria’s Phillips Brewing Co. recently told me, “From a distribution standpoint, the LDB does an amazing job of getting beer to all corners of the province in a very cost effective and efficient manner. From a retailing standpoint, the LDB is a great partner, is very dependable, [and] has huge reach.”  

Ironically, the impressive growth that our province’s craft beer industry has recently experienced (as evidenced in the June 2014 LDB Quarterly Market Review) has occurred without a strong and comprehensive LDB in-store marketing and product placement strategy for BC craft beer. As a quick walk through any GLS in our province will illustrate, there is currently a glaring discrepancy between the way that BC craft beer is sold and marketed and the way that BC wine is sold and marketed. While the wines produced by our province’s vintners are displayed in prominent store locations and are marketed as high-quality, local products, the work of our province’s craft brewers doesn’t typically benefit from similar marketing, and is predominantly placed on the crowded periphery of stores, alongside domestic and imported macro, cider, and coolers.  

For Gary Lindsay, Director of Marketing and Sales for Victoria’s Driftwood Brewery, the LDB’s current approach to in-store marketing predominantly “benefits larger vendors and those with bigger marketing budgets.” Product placement, he noted, “is very arbitrary and varies widely between stores.” The confusion that arbitrary product placement can foster is also a big issue for the industry. As Matt Phillips told me, “If someone is expecting to have a full flavoured beer, and they end up buying something with a less than 100% malt ingredient list just because it is next to other craft beer on the shelf, it may turn them off the category.” Indeed, as a high-quality, local product, craft beer has a strong appeal to the increasing number of consumers turning away from imported and mass-produced goods, and toward local food, spirits, and other artisanal wares. Unfortunately, the LDB’s marketing of BC craft beer has failed to capitalize on this angle, leading to missed opportunities for growth and lower revenues for both the LDB and BC’s craft brewers.

Could this all be about to change?

Along with several other initiatives that came out of the Report, there has already been some movement to implement Recommendation # 23. I recently spoke with several members of the LDB’s marketing department, including Tarina Palmer, Senior Communications Program Officer for the LDB,  who noted that, “When the Province accepted [Parliamentary Secretary John Yap’s] recommendations and released the Report in its entirety, this in itself was direction to the LDB to take action—and work began immediately. Aligning with Recommendation #23, the LDB will continue to look at innovative, unique ways to improve the marketing and promotion of BC products”. Importantly, Palmer noted that the LDB is working with our province’s craft brewers to bring new products to market and to promote the industry, “through in-store signage and displays—including October’s Craft Beer Month and August’s Buy Local month.”  

Ken Beattie, Executive Director of the BC Craft Brewers Guild (Guild), knows that while there is definite room for improvement, there have also been some positives in the LDB’s recent promotion of BC craft beer. Reflecting on several of the LDB’s marketing initiatives, from checkout displays and in-store tastings to features in Taste magazine, Beattie told me that, “The Guild is encouraged by the continued efforts of the LDB to promote and place new BC craft beer products in their stores.” However, Beattie also recognizes the hurdles facing the industry as it seeks increased opportunities for GLS sales. “The challenge faced by the LDB is the unprecedented growth of craft breweries now opened in BC and the amount of products these breweries want distributed, versus the available space allocated to beer in each GLS. [This beer is] competing against wine, spirits, cider, and refreshment beverage products for both floor space and marketing space.”

So what kinds of changes would our province’s craft brewers like to see to the LDB’s in-store marketing and placement of BC craft beer? A ‘Buy BC First’ approach is one idea that came up repeatedly in my discussions. As Gary Lindsay told me, “Always promote local first. If there is a BC option, use that first. Stop soliciting US and imports for business. That alone would be huge.” Matt Phillips agrees. “The LDB should have a mandate to promote BC craft beer, as it helps the province economically, creating jobs and investment, and keeps money in the province.”

This idea is central to the Guild. As Beattie told me, his organization “would like to increase [its] partnership with the LDB to create and promote a ‘Buy BC First’ program, [and] would like to see a section of each store dedicated to promoting BC craft beer, similar to the VQA [Vintners Quality Alliance] wine section in each store.” Continuing on this point, he noted, “The marketing and promotional support the LDB has provided to VQA wines has contributed greatly to the current success of the BC wine industry. We feel there is ample opportunity to substantially increase our in-store signage, our display space, and our marketing opportunities within the store system to better promote a ‘Buy BC First’ mentality.” Beattie also mentioned that the Guild would like to partner with the LDB on the following initiatives:

• A dedicated monthly display
• Continued support through various existing LDB marketing channels
• Improved beer education for GLS employees
• More regional representation at the store level for local breweries, with individual managers having discretion to bring in local products that may not be available throughout the LDB system but which have a strong connection to local communities

The benefits of the Guild’s approach are clear. Having a distinct, central area of GLSs that showcase BC craft beer would go a long way to broaden its market share, showcase its value as a local, high-quality product, and promote the work of an industry that is creating jobs and driving economic growth in nearly every corner of the province. 

I’m hopeful that, like the sale of craft beer at farmers markets, we will soon see another of the Report’s key recommendations adopted in BC. The value to consumers, industry, and the provincial economy is clear, and the Guild has certainly done a fantastic job of moving this initiative forward. It’s now up to the LDB to work with the Guild to create an in-store marketing and product placement strategy that showcases the fine work of our province’s craft brewers and provides some parity with BCs wine industry. If the experience of our province’s vintners is anything to go by, a few key changes by the LDB could have a massive impact on the fortunes of BC’s craft beer industry.