Shelf-serving liquor displays oust the little guys
On the shop floor the battle of the shelf wars has intensified, as big beverage companies move to entrench their position by squeezing out smaller competitors from prime display space.
One of these is multinational brewing company Anheuser-Busch InBev, which has upsized its packs across beer and cider brands and increased the height of cans of certain brands, specifically in the South African market.
Besides creating the need to buy extra shelf space, the bigger packs suggest there will be less space for competitors' brands. And with the proposed ban on alcohol advertising in mainstream media, store displays will be the next advertising battleground.
Ernst Henning, owner of Totpack Distributors, said big liquor companies such as Distell and ABInBev could pay up to R7000 a month for shelf space at independent liquor stores, while the cost of display advertising in a store could be up to R13000 a month.
"As a small company, we can't pay that sort of amount when stores buy R2000 of our stock. I can't take my brandy and put it on the shelf, because the shelf space belongs to them [big companies]," said Henning.
"The shelf space is being bought out for a year and we can't even put up a poster because they bought the display area and they pay these people on a monthly basis; that basically takes us out of the market."
The effect is that smaller liquor distributors are going out of business.
Like Henning, Boetie Rietoff, the owner of Cape Town-based company Somerset Wines, has had to put his business on the market. "We can't get our products listed with Pick n Pay or Shoprite Checkers."
ABInBev owns several brands, including Flying Fish, Castle Lite, Carling Black Label and Corona.
Distell owns ciders Hunters and Savanna, and wine labels Two Oceans and Cellar Cask.
Dennis Matsane, communications manager and head of corporate affairs at Distell said Distell competed for retail shelf space, along with all other beverage manufacturers operating in this sector of the market.
Big liquor companies such as Distell and ABInBev could pay up to R7000 a month for shelf space at independent liquor stores.
"The allocation of shelf space is the prerogative of retailers. Distell is also significantly underrepresented on shelves, in coolers, as well as floor space in relation to its share of the total liquor market."
Matsane added that packaging size offers were determined by consumer research.
SABMiller - bought by AB Inbev last year - was accused of anticompetitive practices through its distribution and pricing activities but was cleared by the Competition Tribunal in 2014.
ABInBev is the biggest global brewer, while Distell is the second-largest alcoholic beverage company in South Africa.
Rietoff, who has been running his business for more than 20 years, said: "Seventy-five percent of the products listed in wines comes from Distell or Douglas Green ... so your smaller producers are dying. They cannot get the wines listed because it revolves around money."
But a manager from a leading liquor store, who did not want to be named, said: "Although we do make allowances for more space, we let the liquor brands know that it has to be for a certain time."
Products were displayed so that shoppers had a choice and new products were highlighted to attract customers, hopefully encouraging them to buy.
The manager said that in a store they would always make space for the big brands, because Distell and AB InBev always bought that space. He remained mum on the price they paid for shelf space, saying only: "It's negotiable."
Robyn Chalmers, director of communications at ABInBev Africa and SAB, said: "We are not aware of any complaints. We have, however, received overwhelmingly positive feedback from consumers and customers on the new 12-packs.
"There has only been a very slight increase in the height of the can, which is not enough to impact the space in coolers.
"The reality is that, given the slowdown of the economy, consumers are looking for value and liquor is no different. As a result, all liquor categories have been competitive in this regard."
Two six-packs of Castle Lager cost about R120, while the 12-pack retails for about R112.80, an attractive value proposition for consumers with limited spending capacity.
But retailers have to remain competitive. David North, group executive of strategy and corporate affairs at PicknPay, said: "Products come in different pack sizes, large and small.
"Our job is to make sure what we put on our shelves reflects what customers want to buy. In liquor, as in other areas, innovation is important in attracting and delighting customers, and innovation often comes from new and smaller suppliers.
"So we make sure that they are positioned and marketed attractively."
The liquor advertising ban has been hanging over the industry. Many industry pundits say this might have a dire effect on smaller industry players.
Brian Sudano, managing partner of the Beverage Marketing Corporation in New York, said: "It will become even more difficult for smaller players to gain access to floor space as they will not be able to leverage media buys to gain access.
"Grassroots marketing will be required to elevate awareness and motivate retailers to provide space for small brands."
This would require a two-stage approach by focusing on bars, restaurants and festivals to elevate awareness of brands; and getting consumers to try their products, Sudano added.
For smaller players such as Henning and Rietoff, defeating big giants will be difficult.
"If you are in charge, like they are, you can basically do what you want," said Henning.