Beer prices to hit Christmas low

Beer prices are expected to hit an all-time low this Christmas as consumer demand weakens after a summer of poor sales.

Discounting in the take-home trade – a regular Yuletide phenomenon – is widely believed to have started a month earlier than normal, with two-for-one deals being offered on major national beer brands such as Carling, Carlsberg and Heineken.

In the pubs and bars trade, where the average quoted price of a barrel of beer is 250, discounts in long-term supply contracts are as much as 120 per barrel, according to one source.

Figures from the Office of National Statistics show that the amount of beer sold in the UK in the year to July, normally a key month, was down 12 per cent on the same period in 1997.

Stuart Price, drinks analyst with Credit Suisse First Boston, says: “It wouldn’t surprise me if it is the worst Christmas on record. Consumption is down dramatically on last year, which suggests there is substantial pressure on the brewers’ margins. Retailers will use the fact that beer volumes are in decline as leverage.”

Iceland this week announced it will sell five-litre barrels of Beck’s for 9.99, the same price they are sold for duty free on cross-channel ferries. The Beck’s is sourced from overseas, a blow to Scottish Courage which has the licence to distribute it in the UK.

Iceland is also offering a similar deal on “reassuringly expensive” Stella Artois, which it is selling for 3.99 for nine 25cl bottles. Again the product is sourced from the continent, not from Whitbread, which holds the UK licence.

“It seems certain to be the toughest Christmas ever – the gloves are off,” says Martin Templeman, senior buyer for alcohol at Iceland.

Neither Whitbread nor Bass will comment on the predictions.

However, Vincent Kelly, Carlsberg Tetley’s managing director for take-home, says: “The feedback [we are] receiving is that it won’t continue. It’s pre-Christmas skirmishing as retailers look to build customer loyalty.”


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