Anheuser discounts rumors of price war

Modern Brewery Age, May 30, 2005

Anheuser-Busch may be guilt of aggressive pricing, A-B president and CEO Pat Stokes told analysts at A-B's conference on Wednesday, but it isn't aiming for a price war with its competitors.

The company has increased promotional activities in some markets, which caused some industry watchers to predict an imminent price war. But A-B says that this outcome is unlikely. Stokes said that the company's pricing strategy aims to reduce an existing price gap in some markets, rather than undercutting rivals prices.

Stokes backed this up with some numbers. He said that in first quarter '04, Bud Light sold on average nationwide at a price 45 cents a case higher than Miller Lite. Of late, that gap has narrowed to 15 cents a case, due to Anheuser's tactical price promotion efforts.

Stokes said that the rhetoric of some in the beer industry overamped the situation. And he stressed that pricing will be only one arrow in A-B's quiver. Stokes said the company is also pushing new products, increasing ad spends, and punching up on-premise spending.

"When sales and market-share momentum are restored, we expect to return to our long-term objective of double-digit EPS growth," Stokes said.