Crafting a Plan for Bell's Brewery

While spring officially starts on March 20, in many areas, particularly those in Kalamazoo where Bell’s Brewery is headquartered, the real end of winter started March 24, 2014—Oberon Day.

As consumers are relishing their first taste of summer with the award winning ale, few are concerned about its availability—that is until they cannot find their favorite beer on the shelf at the grocery store.

“Having products available when and where customers want to buy them is the most important performance measure there is, if you lose that opportunity, it is gone forever,” says Dr. Marcel Zondag, assistant professor of marketing. 

Maintaining the right inventory of beer, wine and spirits is a complicated business says Zondag, who, together with Dr. Bruce Ferrin, associate professor of marketing, is working with Bell’s brewery; Constellation Wines, San Francisco, their distributor in southwest Michigan; and Meijer stores on research to improve the in-store selection and availability of craft beer, wine and spirits for shoppers.

“We hope to discover whether application of supply chain management theory to supply processes used for craft beer, wine and spirits poses any pragmatic challenge,” says Ferrin. “We are trying to develop new performance metrics for assessing supply chain performance in relation to on-shelf availability and market responsiveness.”

Ferrin and Zondag are finishing the first part of their research this summer, conducting qualitative research that includes interviews with marketing and sales people at Bell's, beer buyers for Meijer and representatives from some of the distributors. To learn more about the process, Zondag accompanied distributor personnel as they replenished and stocked retail stores. In addition, as part of an honors thesis, Karen Kalinski, a food and consumer package goods marketing senior, is conducting research about the connection between alcohol sales in grocery stores and surrounding bars and restaurants.

“The research question I try to answer is if these sales are related—if consumers, for instance, will buy more of a specific craft beer or wine after they’ve sampled it first in their favorite restaurant,” says Kalinski.

By analyzing the procedures used for deciding which beers and wine to sell and combining it with store-specific sales data, the researchers intend to improve the assortment decisions and inventory management procedures used in the adult beverage supply chain.

While the growth of e-commerce has changed the industry, the retail store remains the most important marketing vehicle. “The store is the place where marketing strategy and supply chain management comes together,” says Zondag.

“After all, the store aisle is the one point in time where all marketing and sales efforts come together and the place where the so-called value proposition can finally be captured in sales dollars.”

Much of the work in the retail supply chain is faced with practical challenges that make putting theory into practice difficult. According to the researchers, barriers include retailer procedures and strategies for determining item assortment and allocation of their shelf space to specific brands and items, identification of the demand signal (the data stream that identifies which items should be replenished, in what quantities, where and by when), and streamlining, synchronizing and coordinating the entire supply chain to that demand signal.

Zondag and Ferrin welcome the opportunity to conduct research in collaboration with industry partners. “It provides valuable insights and data for our academic research, but it also provides a direct link from theory to practice, helping to improve business operations and performance of Michigan businesses,” says Zondag.