Kroger introduced the plan last year, which would have a company called Southern Wine & Spirits doing the job beer, wine, and liquor companies used to do: overseeing how much display brands get in the aisle of the chain’s more than 2,600 stores in 29 states, reports The Wall Street Journal.
It asks for alcohol companies to pay Southern for the service, voluntarily, instead of Kroger footing the bill.
Kroger likes the idea because it can rearrange store shelves more frequently, depending on what trend consumers have landed on or what kinds of seasonal booze are popular. Right now, the company makes these changes up to twice a year, but it’s an inconsistent system across all those stores.
“Our goal is to better respond to customer needs and more quickly bring new, innovative adult beverages to market,” said Kroger spokesman Keith Dailey.
But alcohol companies are banding together against the plan, predictably, as it takes the power away from alcohol manufacturers and puts it in the hands of another company. Industry trade associations representing liquor, wine, and beer, as well as alcohol-distributor groups, have sent letters to federal regulators questioning the legality of Kroger’s plan. The Alcohol and Tobacco Tax and Trade Bureau said it is reviewing the matter.
Craft brewers and other small booze businesses are a bit worried about the plan as well, with some calling it a “pay-to-play” system. The new plan would cut into their margins, and if they can’t afford to pay Southern, their beers and spirits might never see the front of the shelf.
A Southern spokesman said the fees would be voluntary, and that manufacturers who don’t pay into the program wouldn’t be “adversely affected.”
In order for the program to gain approval, the Alcohol and Tobacco Tax and Trade Bureau has to give it the okay, and Kroger and Southern will have to make sure everything complies with state laws. Which, as we all know, can be very complicated when it comes to selling booze.
Kroger Plans to Upend How it Organizes Booze in Stores [Wall Street Journal]