One of the more promising product segments of late has been store brands, also known as private-label products, driven by consumer demand for value. Last October, a Consumer Reports study indicated that store brands can save consumers as much as 30 percent over brand name products — a welcome relief for the recession-weary.
The latest entries in the store brands category will test a market that has been largely untapped, so to speak: value-priced beer.
Supervalu, one of the three largest U.S. grocery chains, and Walgreens, a leading drugstore chain, have introduced "Buck Range Light" and "Big Flats 1901" (which generated a "not bad" review by a YouTube user above), private-label beer brands that sell for about 50 cents per can. And that's just the tip of the six-pack.
Supervalu's director of beer, Trent McKinster, says the company "is creating a new private brand beer to provide customers a fair, low price option with the same great taste as leading national brands." It well sell at numerous Supervalu retailers, including Albertsons, Jewel-Osco, Cub Foods, and Farm Fresh.
Winery Exchange, the company that manufacturers both Supervalu's Buck Range Light and Walgreen's Big Flats 1901, said in a press release that Walgreen's new brew "offers consumers a premium beer at an affordable price." According to Kathleen Burns, senior marketing manager at Winery Exchange, "In just the first few weeks of sales consumer feedback has been very positive, as beer drinkers across the U.S. are thrilled to have such a quality brew at a value price." Walgreens will soon offer a new Australian table wine as well.
Private-label alcohol products are certainly not a new market for supermarket retailers. Specialty grocer Trader Joe's turned its low-price Charles Shaw wines into one of the most popular wines in the U.S. Originally priced at $1.99, the wines became known as "Two Buck Chuck" (and inspired this little NSFW ditty) but prices have since gone up. In 2008, warehouse retailer Costco introduced Kirkland Signature "Handcrafted Ales."
Last spring, 7-Eleven brought out Game Day Light and Game Day Ice beers. While some 7-Eleven stores have discontinued its sale, 7-Eleven told the Wall Street Journal that "Game Day Light has been a hit with consumers."
But as the Journal points out, private-label value-priced beers will likely have an uphill battle against heavily advertised well-known brands. After all, it's nearly impossible to compete against the likes of Bud Light, a brand that dominated television advertising at this year's Super Bowl and signed a six-year deal to be the NFL's official beer brand.
Still, Supervalu and Walgreens are depending on consumer acceptance of store brands and the popularity of value-priced beer — which could result in a difference of as much as $4 per six pack -- to swing beer drinkers in their direction.
Of course, while consumers may buy the concept, established beer makers and even some industry experts are scoffing at the store brands.
Dave Peacock, president of the U.S. Division of Anheuser, the company that makes Bud Light, told the Wall Street Journal that "the [beer] industry is defined by players who invest heavily behind brands." Harry Schuhmacher, who publishes the Beer Business Daily newsletter, added that "nobody has succeeded on the low-end with private-label beer."
But that isn't stopping Supervalu or Walgreens from giving it a shot.