BEER VOLUME UP; PRICE GROWTH DOWN: MERRILL LYNCH

STEPHANIE FAGNANI

NEW YORK -- Beer volume rose by 0.7% in the food and drug channels during the four-week period ended Oct. 3, following a decline of 4.8% in the prior month, according to the latest U.S. Brewing Industry report from investment bank Merrill Lynch here. Analysts believed the Labor Day weekend, which was included in this four-week period, helped boost volume sales. Year-to-date, beer volume has declined by 2.1%.

Volume of micro/craft beer rose the most within the beer subcategories for the month ended Oct. 3 by 5.1%, while light beer experienced volume growth of 4.4%; malternatives, 3.9%; and imports, 2.3%, according to the report.

Among the top brewers, Budweiser and SABMiller experienced declines in volume share, while Coors gained for the second consecutive month.

Anheuser-Busch saw overall volume drop by 0.8% for the four-week period and by 3.1% for the year-to-date (see chart on this page). Miller witnessed volume growth of 0.4% for the four weeks ended Oct. 3, but volume is down 2.4% for the year. Coors, with the highest volume growth for the period at 2.5%, is down in volume for the year by 3%. Volume for imports rose 2.3% for the month, but declined by 1.1% for the year.

Although beer category pricing did increase during the four-week period by 2.8%, that marked the slowest rate of growth since March of this year, Merrill Lynch said. Analysts at the firm predicted beer prices will remain strong and brewers will look to increase prices again this fall, but the rate of price growth will continue at a slow pace.

The price difference for Bud Light and Miller Light was only 41 cents per case during the latest four-week period, lower than the 64-cent price gap in the prior month and the 52-cent differential in prices for the two beer leaders for the year-to-date. Bud Light averaged $16.35 per case compared to Miller Light at $15.94 per case, an increase of 1.1% and 3.6%, respectively, over last year, according to the report.

Prices for imported beers increased the most in both the four-week period, by 3.8%, and year-to-date, by 3.4%. Price growth among the Corona beers was 6.9% for the month and 6.5% for the year-to-date. Conversely, Heineken price increases were much more moderate at 2.2% for the month and 1.1% for the year. Not surprisingly, the price gaps had an impact on sales. Corona's volume slipped, while Heineken saw volume gains in September.

While imports are still a small part of the total beer category at Niemann Foods, Quincy, Ill., they are being promoted more and more as a way to add excitement to the category, Martin Miller, nonperishable category buyer, told SN.

"As the latest reports have shown us, it appears the aging, beer-consuming male is bored with his typical purchase of Miller or Bud 12 packs on the way home from work and is enjoying experimenting with new beers. As a retailer, I am growing tired of promoting the key brands at zero or negative margin, and am trying to improve the margin mix by advertising more imports, micros and malternatives," he said.

Major Brewer Volume Growth

(4-Wk and YTD Periods)

4 weeks ended 10/03/04; YTD

Total US beer (incl. imports): 0.7%; -2.1%

Anheuser Busch: -0.8%; -3.1%

SABMiller: 0.4%; -2.4%

Coors: 2.5%; -3.0%

Imports: 2.3%; -1.1%

Source: IRI and Merrill Lynch