Summer Time & the Beer Is Cheap

Price war anticipated as Fourth of July nears

NEW YORK -- Retailers can expect beer pricing to start getting more and more competitive as summer and the July 4 holiday near. This comes as Miller Brewing Co. announced plans last week to sharpen its marketing message and adjust any relative price gaps where competitor discounts have impacted sales.

This, combined with ongoing weakness in the U.S. beer category, has led analysts at New York City-based Morgan Stanley to report, We expect pricing to become more competitive ahead of July Fourth, with prices of Anheuser-Busch down in many markets and SABMiller [image-nocss] indicating that it would be more competitive for the key July Fourth holiday period.

Harry Schumacher, editor of Beer Business Daily, also anticipates a growing price war. Miller Brewing Co. virtually admitted to losing the price war with A-B and Coors over Memorial Day, but vowed that it would not be fooled twice, Schumacher wrote in the June 16 issue. With this preemptive release, Miller may have taken the wind about who won Memorial Day out of Coors and A-B's sails. It appears that Miller is getting the word out in a preemptive strike, to perhaps put A-B on the defensive.

Scan data from Information Resources Inc., Chicago, shows Miller Lite did gain share over the Memorial Day weekend, while both Budweiser and Bud Light lost share. However, the newer Budweiser Select gained 2 points, more than offsetting the Budweiser and Bud Light losses. Meanwhile, Coors share was up 0.2 points, lead by strong 5.9% volume growth for Coors Light, according to Schumacher.

It appears that heavy discounting is going to be the norm throughout the summer, noted Schumacher, who quoted Morgan Stanley's Bill Pecoriello as saying, With Miller issuing a public statement that it will become more competitive for July Fourth, things will get uglier. We expect pricing to clearly get more competitive.