By Richard M. Blau, GrayRobinson Alcohol Law Attorney and Chair, Alcohol Industry Team
For months, the alcohol beverage trade press and industry observers have been abuzz about plans by major retail supermarket chain Kroger Company to contract with giant alcohol distributor Southern/Glazers to oversee how the supermarket distributes shelf space to alcohol beverage brands. The plan, designed as the development of a "Planogram Center of Excellence," calls for Southern/Glazers to oversee how much display alcohol beverage brands get in the grocery aisles of the more than 2,600 Kroger stores in 29 states. The new plan also calls for Southern/Glazers to cover the cost of the service it will provide with "voluntary" contributions from alcohol beverage suppliers based, in part, on the volume of their products that show up on Kroger shelves.
Kroger announced the plan in 2015, arguing that contracting with its largest distributor to handle shelf and space allocation, brand choice and placement, etc., made good business sense to improve the grocer’s responsiveness to customer demands. Currently, alcohol beverage shelving plans typically are updated only once or twice each year, based on input from the brands’ suppliers, who act as "category captains" to provide shelving advice and shelf space allocation suggestions. With Southern/Glazers alone organizing the purchase and placement arrangements, Kroger argued new craft beers, seasonal wines and innovative products will make it to the grocery shelves faster.
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This article is published in the February 2016 issue of Fintech Focus. For more information, click here.