| How Low Can They Go
This month column was written by Bob's friend
Hello from London to Bob and all his readers. I thought I'd send you
all some beer news that's headline stuff in some quarters over here.
The company that makes Budweiser, Beck's and Stella Artois brands of
beer is lowering its alcohol content in order to save millions in taxes.
AB InBev is lowering the alcohol content levels from 5 percent down to
4.8 percent. The company says the reduction will only affect sales in
the UK (for now). Ab InBev says they are making the change to save
millions on production costs, which will allow them to avoid a 7.8
percent price increase that is being imposed by some other beer
Industry insiders said some retailers had rejected demands for price
increases and producers were cutting abv to offset costs, retain price
points and shore up profitability.
"Some of the major mults have denied price increases for three years,
and the brewers' answer is to shift into smaller bottles and move from
5% to 4.8%," said one industry source.
It has been estimated that cutting Stella Artois' abv by 0.2% would
save AB InBev about £8.6m a year in duty, based on its off-trade sales
alone. However, it would need to persuade big customers there was
something in it for them too, said several market analysts, with money
being invested back into the brand.
The change in alcohol content comes after AB InBev raised prices last
year. At that time AB InBev said it would be forced to raise prices
following an increase in the cost of energy and raw materials. However,
according to industry insiders, the proposed price hike was rejected by
some retailers, forcing the brewer to increase profitability in other ways.
One industry source told me that some of the major multiples have
denied price increases for three years and the brewers' answer is to
shift into smaller bottles and move from 5per cent to 4.8per cent.
AB InBev is set to save £8.6million a year in duty on its off-trade sales
of Stella Artois alone, according to market researchers Nielsen.
In a not unrelated development, it was just announced that the
company's president, Dave Peacock, would be resigning.
It was only a few years ago that August Busch III admitted that the
recipe of Budweiser and Bud Light had been evolving for decades to
gradually lightening their flavor. I guess maintaining the kind of bland
tastelessness Bud is quite an accomplishment in industrial chemistry.
As a word of warning may I remind the InBev group about my favorite
beer as a youth growing up in Delaware. It was Schlitz which used to
be the number 1 beer in America . Cutting corners to save money
they changed the formula. It sure turned out great for them, that's if
you call bankruptcy great.
Now don't get me wrong I'm not complaining that Bud has reduced
alcohol content. I enjoy many a dark mild brew at my local even with
a lower alcohol content then Bud's 4.8 but at least they have flavor.
I'm just championing the bloke who wants his 5% Bud to be a 5%
That's it from me. Thanks to Bob for letting this old friend give his
readers a look at some beer news from over here. And Bob, on a
personal note, I'll be visiting Delaware next month so plan ahead for a
few nights of beer tasting. And no, I don't mean anything from InBev.
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