Will Busch Light Hurt Premium Lights?

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Brew Blog

Historically high price gap against Miller Lite.

Will Busch Light drag down premium light brands like Miller Lite?

It’s a question worth asking because the price gap between Busch Light and Miller Lite is at a historically high level. And wide price gaps can encourage people to trade down. Recall when A-B reported first quarter earnings, the Busch and Natural Light franchises were the only big brand families that grew during the first quarter.

For the quarter ended March 29, the total aggregate price gap (a national weighted average price gap) between Miller Lite and the Busch franchise was $4.33, according to beer sales statistics from Nielsen. During the same period, 30 percent of market volume had experienced higher Busch Light discounting.

For context, during the year-earlier period the price gap was $3.94.

For the same periods two years earlier — after A-B reset prices of its brands in a bid the stem the growth of Miller Lite — the gap stood at $4.22.

In 1998, by comparison, the total aggregate price gap was $3.01.

A-B appears to be taking pricing action on Busch Light to appeal to consumers who are feeling pinched.

It apparently wants to make sure such consumers stay in the A-B family. But one wonders if pricing might also encourage consumers to trade down.

 

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