USA: Strong beer volume growth posted during Memorial Day weekend

U.S. brewers reported strong volume growth during Memorial Day weekend, the kick-off of the key summer selling season, but much of the growth was due to sharp discounts, an industry analyst said on June 3.

"While stronger volume growth is positive, the fact that the beer manufactures achieved this primarily from discounting is disappointing and could be an indication that a price war is brewing," Reuters cited Smith Barney analyst Bonnie Herzog.

Anheuser-Busch Cos. Inc., the largest U.S. brewer, recently said price cuts on some of its brands are designed to bring them in line with rivals' products. "These promotional actions are not intended to take prices below competition and are not across the board," Anheuser President and Chief Executive Patrick Stokes said during a meeting with investors last week. "They are selective on a market-by-market basis where we feel we need to better compete at specific price points."

Stokes was adamant that the company, whose labels include Bud Light and Michelob, was not starting a price war and that its long-term strategy was to raise prices at or slightly below increases in the consumer product index.

Volume growth in the beer industry has suffered in recent years as consumer tastes have shifted toward cocktails and wine. Health conscious consumers also have been drinking less beer as a result of the popularity of low-carbohydrate, Atkins-style diets.

Good weather also helped boost sales during the holiday weekend. But the sales growth may not hold up after the discounting eases, said Herzog, whose data was based on a survey of more than 40 beer wholesalers.

"There are still basically no signs that beer industry fundamentals are improving," Herzog said. "Until we see a resumption of pricing and a 'return' of the beer consumer, we maintain our negative outlook on the industry."

Anheuser's stock fell 58 cents, or 1.22 percent to $47.01 in Friday morning trading on the New York Stock Exchange. Shares of rival SABMiller Plc, which has headquarters in South Africa and Britain, were up 0.18 percent on the London Stock Exchange. Molson Coors Brewing Co.'s stock was up a penny at $58.91 on the New York Stock Exchange while Boston Beer Co.'s stock stock was down 12 cents at $21.53.

04 June, 2005