Retail news: World Cup beer war

Christmas, it would seem, is not the only period of peak demand when drinks prices are slashed. Tesco, Asda Wal-Mart, Sainsbury’s and Morrisons have been drawn into a beer price war provoked by World Cup fever.

Prices have been cut to as little as 40p per can in some instances in attempts to entice beer drinkers out of the pubs.

The British Retail Consortium estimates that for every week England remains in the tournament consumers will spend an extra £124 million on food and drink, mostly beer but also including spirits, wines and snacks.

Asda is offering a 20-can pack of Stella Artois, Foster’s, Carlsberg, Kronenbourg or Budweiser for £9.98, a discount of £4 on the usual retail price. Two packs come even cheaper at £16.

England striker Michael Owen is heading Asda’s advertising campaign during the World Cup. The store said that beer sales rose 65% for England’s opening game compared with the same week last year.

Rival retailers are responding in kind, though it seems that only Tesco is not struggling to keep pace with these ultra-low prices. Although Sainsbury’s has delivered strong like-for-like development in recent quarters, price deflation and increased costs have put pressure on the company. According to Moody’s investor service, Sainsbury’s margins “have been on a declining trend and remain at a low level relative to those of [its] peers”.

© db July 2006