Newspaper article THE JOURNAL RECORD

Beer Price Cut by Anheuser-Busch May Spew into War among Brewers

Newspaper article THE JOURNAL RECORD

Beer Price Cut by Anheuser-Busch May Spew into War among Brewers

Article excerpt

In a move that may spark a beer price war, Anheuser-Busch Cos. has decided to cut prices on all its brands, including Budweiser, the nation's best-selling beer.

As a result, the company said, it will have lower earnings for the balance of this year and next year.

Anheuser-Busch, the nation's largest brewer, with about 42 percent of the market, said Wednesday it would match discounts made recently by its rivals of as much as 25 cents on a 12-pack of beer. Such 12-packs sell nationally at between $6.75 and $8.

But the company will not initiate any cuts, said Jerry E. Ritter, vice president and chief financial officer.

``Our plan, first and foremost, is to be competitive in the marketplace,'' he said.

Roy D. Burry, beverage analyst at Kidder, Peabody & Co., said the strategy was aimed at Miller Brewing Co., a unit of Philip Morris Cos., the nation's No. 2 beer maker, and at Adolph Coors Co., which recently agreed to acquire most of Stroh Brewery Co. in an alliance that would form the third-largest beer company. That deal is subject to regulatory approval.

``Busch is an 800-pound gorilla that's trying to turn up the heat in the industry,'' said Burry, who called Busch's announcement ``a surprise to everybody.''

William Leach, analyst with Donaldson, Lufkin & Jenrette, said, ``The fundamental problem with the industry is that, with the exception of Anheuser-Busch, everyone has excess capacity, which means that everyone is tempted to discount.''

A spokeswoman for Miller in Milwaukee said, ``We will continue to price promote to remain competitive.''

In Golden, Colo., a Coors spokeswoman quoted Dick Franklin, vice president of sales, as aying: ``There is clear evidence that the Bud brand is declining in numerous markets. Consequently, Anheuser-Busch is trying to slow this decline with heightened price-reduction activities.''

Busch's announcement was contained in the ninth paragraph of a routine 13-paragraph statement issued Wednesday on the company's earnings for the third quarter.

The pricing move stunned analysts, who rushed to lower their earnings estimates. …

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