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Competition lowers price of beer to level of soft drinks

Losses of beer war regained in prices of bottled water

Competition lowers price of beer to level of soft drinks
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Finnish supermarkets are now selling beer at discount prices equal to those of regular-priced soft drinks. The difference in price for one litre of beer or mineral water can also be as low as 50 cents.
      The cheapest price for one litre of beer on Tuesday was around EUR 1.60, the same as the normal price for sodas. Mineral water costs around one euro per litre.
      Beer has never been as cheap as it is now this summer. It has become the prime loss-leader item for supermarkets, and although Midsummer was the most intensive campaign season, at least one brand is on sale at starkly reduced prices at any given time. However, prices and campaign products vary significantly in different parts of the country.
The beer specials are so expensive for stores that the losses must be recouped in the prices of other products. For example, mineral water has been discounted on sale much less frequently this summer. Soft drinks have also remained at normal prices most of the time.
      Supermarket chains keenly watch each other's prices. When one store lowers its beer price, others quickly follow suit. The largest hypermarkets have been most active in their campaigns.
      The current hit product on the shelves is the "dachshund", or a pack of 12 bottles, totalling 4 litres.
Many store owners are hoping the price war will quieten down once the weather grows cooler. Pentti Kalliala, the owner of a K-Supermarket, admits that the offers are not good business. He points out that breweries are not participating much in the campaigns by giving discounts of their own, so the losses are almost all incurred by the retailers.
      Kalliala estimates that in order to make a regular profit, a 12-pack dachshund should be sold for 12-13 euros, not for the current 8-10 euros.
      Director Eino Piesk√§ from a Helsinki Prisma supermarket does not believe that the beer price war will end any time soon. "But it may be that the significance of beer is different in the summer from what it is in the fall. When you go to the summer cabin, you buy at least a dachshund."
Store owner Toni Pokela from the Citymarket at the Iso Omena shopping centre in Espoo says that as the store is geared toward families, they would rather use a different loss-leader. However, the market situation determines what customers must be offered, he remarks.
      "The beer equation is quite unhealthy now. The cut in alcohol taxes lowered the wholesale price of beer by about ten percent, but stores dropped the prices of dachshunds by twenty percent", Pokela explains.
      Pokela also hopes that the situation would soon calm down, and that competition would return to other products as well.

Helsingin Sanomat

  4.8.2004 - TODAY
 Competition lowers price of beer to level of soft drinks

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