18 February 2010

SABMiller Sales Flat

Stock market analysts were expecting SABMiller to post a 1% sales increase. But SABMiller fooled them. Sales in the third quarter were flat, but not unexpected by the company.

I've been in and out of retail for almost 30 years, and have seen these companies do some weird things. Here's an interesting point made in the article:

Declining interest in Miller Lite, and to a lesser extent Coors Light, was only partly offset by continued growth of MGD 64.

I've seen other companies introduce products that compete directly with the main profit maker: cigarette companies in the late 90s had Premium cigarettes, sub-premium, generics, sub-generic and sub-sub-generic price tiers. I once worked for a cigarette company and at one meeting, our regional supervisor became angry when he noticed one of my co-workers smoked our sub-premium brand, because the company made the most money from premium brands. Ironically, the meeting was about the introduction of a new sub-generic brand by the company.

Food manufacturers cut their own throats by producing store brands items for supermarkets that compete with their premium line. Now SABMiller is hurting their Miller Lite and Coors Light sales with MGD 64, much like AB hurt Bud Light sales with Michelob Ultra a few years ago.

Again, nothing new, but interesting.

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posted by Jeff Holt at 08:45

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