Brewers with seasonal or variety pack placements in Walmart stores may be in for a bumpy ride.
The Beer Industry Electronic Commerce Coalition (BIECC) threw up a warning flare last week that the largest brick-and-mortar retailer in the U.S. would be mandating that all seasonal brands and variety packs use unique UPC codes, starting in early 2024.
Brewers were given until July 14 to state whether they planned to comply. The unique UPC transition will take effect in March 2024.
The practices of brewers reusing UPCs has been common for decades to easily swap in and out seasonal products or switch up their variety packs.
However, Walmart appears to be taking a hardline stance with the unique UPC mandate, with plans to remove non-compliant products.
National Beer Wholesalers Association (NBWA) VP of state affairs David Christman told Brewbound that the BIECC made its case to Walmart about three weeks ago, and although the chain retailer’s leadership was accommodating, they plan to push forward with the program, with alcohol being one of the last categories for implementation.
The reason behind the shift is to cater to online shoppers and ensure those consumers are able to view real-time inventory numbers and receive the specific products that they’re attempting to purchase, Christman shared in a release.
Christman noted that not using a shared UPC could lead to challenges in keeping shelf placements year-round for seasonals. For smaller brewers, it’s an added expense with many having cans printed well ahead of time. This could also present challenges in scan data collection as individual seasonals will be separated out in the future.
Some brewers told Christman the vast majority of their seasonal sales were in-store purchases and now they’re being forced to change for low-single-digit online sales, he shared.
Christman added there could be bigger long-term impacts down the road, with some brewers potentially rethinking the number of seasonals they offer.
Walmart may be only the first domino to fall. Christman cautioned that other chain retailers could follow suit and require unique codes, with grocery chain Wegmans signaling a preference for unique UPCs in the future.
Brewers Association chief economist Bart Watson shared with Brewbound that the trade group is “seeing brewers take different approaches and no clear best practices have emerged,” as its members have a “wide range” of exposure to chains, Walmart and seasonal offerings.
However, Watson shared the following thoughts:
- “Walmart is indicating that they are going through with this program in spite of pushback as part of their desire to ensure certainty in e-commerce ordering and shelf-picking. Note that other players have found other solutions to manage this challenge (distributors often use unique item codes in addition to the UPC). As e-commerce grows in importance for many retailers, it’s possible we’ll see new solutions emerge.
- “The single UPC for seasonals (and single UPC for variety packs) is still the preferred means of doing business by the vast majority of retailers, distributors, and suppliers. To comply with Walmart’s demand could possibly mean running afoul of the best practices of other chain retailers.
- “Each small and large brewer will need to look at their packaging systems, how important seasonal or variety pack distribution through Walmart is to their market plans, what it would mean to comply, and whether they will try to reach a solution. Any solution is likely problematic by reduced access to market for brewers, reduced choice for beer drinkers, and added cost to the system.
- “Walmart appears to be gambling that customers won’t go elsewhere for their beer purchases (or whole shopping trip) if Walmart doesn’t have the brands that beer drinkers want to buy. It is possible we will see those sales simply migrate to other nearby retailers.”