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09/11/2011

Price Hikes More Moderate But Pushback; Crown Up and Down; Big Pressure in Big Apple; Oh?

There continues to be considerable debate about fate of beer industry fall price hikes, even tho AB price hikes seem somewhat smaller than last yr all-in-all. So far, MillerCoors is broadly following tho not everywhere on every brand. Leading importer Crown will take prices up in Fla, at least parts of Tex, and just Modelo Especial in Calif, but it is reducing them in NYC metro. Recall, Crown hasn’t had broad natl increase since 2007. Meanwhile, more-than-typical retailer objections to this fall’s increases, including “almost a mini-revolt in the making” among 2 dozen retail clients, sez consultant Bump Williams. He heard from 21 of his 24 clients (including many of nation’s largest), who told Bump that “their new strategies” will be to “greatly reduce their support of Premium and (walk away from) Below Premium brands,” in favor of imports and craft. Beer industry pricing remains up solidly so far in 2011, and up slightly again over Labor Day.

Some notable pressure points in fall beer price hikes, nowhere more so than in NYC, where AB’s fall price hike unlikely to stick. Manhattan Beer has already lowered prices $1.50 per case on Crown cases of 12-packs in grocery and c-store chains. It also lowered Coors Light 18-packs 80 cents in supers. Both of those price reductions will be in effect for 180 days under NY law and are uncharacteristic for Manhattan. While supers only about 20% of biz, there is potential “cascade” effect, sez one competitive source, noting that now home d’s and other channels will look for similar discounts, potentially upsetting pricing architecture in biggest US city. Why is Manhattan doing this? Tho its sales sluggish and brand Corona soft, Manhattan is still gaining share in tuff mkt. Border crossing an issue, but perhaps no more so than it has been. Then too, Crown keenly interested in gap mgt, looking to keep gap with Bud Light 30-packs at $10 or under. And that is factor here, which would also affect Coors Light. All these may come into play. Could Manhattan, NYC winner in recent yrs, want to turn heat up on competitors and/or give break to hard hit consumers, who’ve faced tax increases and price hike as state took escheat?

Another pressure point worth watching also flagged by Bump in latest letter is in Ohio where Yuengling will enter in Oct at pre-hike prices (posted before AB’s fall moves fully known). What will Yuengling do? In Oh and elsewhere, “we’re weighing our options, looking at each market individually,” said Yuengling coo Dave Casinelli, taking time “to strategically make the best decision.” Recall, Yuengling held 2 yrs ago in core mkts and reaped rewards in retailer goodwill and accelerated growth. If it doesn’t follow in lockstep in Oh, will MC distribs hold at least in part, knocking back price hike there too?

Publishing Info

  • Year: 2011
  • Volume: 42
  • Issue #: 17
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