Speakers:

Dawn Thilmany, Colorado State University

Nathan Palardy, Colorado State University

Jeff Callaway, Colorado State University

Our presentation describes the implications for Colorado Craft Breweries of beer sales expanding to grocery and convenience stores. Our goal is to help breweries adapt to the new regulatory environment by identifying the estimated change in buying patterns and considering how that may influence tradeoffs across the distribution strategies brewers consider (with a particular focus on differences across the scale of brewer). Approximately 1,580 small, independent liquor stores operated in Colorado before a policy change that allowed an additional 1,700 grocery and convenience stores to sell full-strength beer, more than doubling the number of beer-selling retail establishments and increasing the competitive pressure faced by stores. We find that expanding beer retail had a moderate negative impact on liquor stores, a historically important outlet for off-premise beer sales. Foot traffic to liquor stores declined by ~5%, corresponding to an average of 65 fewer monthly visits to a representative store. Larger breweries may be able to offset a drop in liquor store sales by selling in grocery stores, however, as brewery size declines, so does the ability to spread the higher costs of reaching consumers through grocery stores across a higher volume of units. Rural liquor stores appear substantially less impacted compared to their urban counterparts, good news for small breweries in rural areas with few off-premise retailers. Contracts with distributors may facilitate access to the new market channels but the use of distributors comes with its own set of trade-offs. Preliminary results using Nielsen sales data from a panel of Colorado consumers largely confirm our foot traffic analysis. As we find only a moderate negative effect on liquor stores, these retailers are likely to remain an important outlet for reaching consumers and distributors represent one option.

Colorado Craft Brewers SummitBrought to you by the Colorado Brewers Guild

2022 Summit

2022 Summit

Check back later for more information on this year's Colorado Craft Brewers Summit.

Check back later for more information on this year's Colorado Craft Brewers Summit.

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Colorado Craft Brewers Summit
Brought to you by the Colorado Brewers Guild

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