Australia: Industry welcomes the move away from aggressive discounting of beer - Carlton & United Breweries CEO

The decision by Australia’s retailers to move away from aggressive, deep discounting of beer was welcome news for the entire liquor industry, according to Carlton & United Breweries (CUB) CEO Ari Mervis.

In an interview with TheShout on August 6, Mervis said his previously stated view that consumers were happy to pay more for beer had been borne out in recent months.

"Historically there has been a very fierce, competitive race to the bottom in terms of pricing," he said.

"Different retailers have always tried to ensure that they remain the cheapest retailer when in fact the consumer has been happy and willing to pay slightly more than the price they've offered it at."

"I think there has been a little bit more price discipline across the market and we've seen retailers have been charging slightly more and consumers have been prepared to spend a bit more," Mervis said.

"We need to ensure that there's a sustainable margin for all the participants through the value chain."

In any case, Mervis said it's important for retailers to consider their margins on mainstream beer in context.

"Sometimes they don't look at what is a blended margin," he said.

"They'll take the margin that they make out of selling a 24-pack of stubbies, but when you blend it with how many six-packs they sell or how many single units they sell, the blended margin is a lot higher than the five per cent [for a 24-pack]."

Mervis acknowledged that in some demographic areas the proportion of cases sold is higher than that of single units or six packs.

"But generally you will find always that the equivalent of about three six packs is the same price as a 24-pack," he said.

"So if they are able to sell six-packs, bring them to the front of the store and amplify that, they tend to get a higher blended margin."

09 August, 2013