Journal-Times (Grayson, KY)

Community News Network

September 16, 2013

To be largest beer seller Wal-Mart sells Coors almost at cost

NEW YORK — Wal-Mart Stores Inc. is so committed to becoming America's biggest beer retailer that it has been selling Budweiser, Coors and other brews almost at cost in at least some stores.

The markup on a 36-pack of Coors Light cans at a Los- Angeles-area store was 0.6 percent, compared with 16.2 percent for a package of Flaming Hot Cheetos, according to internal documents reviewed by Bloomberg. Companies typically don't release information about markups so the March data provide a rare glimpse of Wal-Mart's alcohol pricing strategy.

Wal-Mart's push into beer is part of a plan to double alcohol sales by 2016 and seize a larger slice of a U.S. beer market worth about $45 billion. While founder Sam Walton frowned on drinking to excess, selling cheap suds is a way to lure shoppers who typically buy other products at the same time. Repeat visits are crucial for the world's largest retailer, which last month cut its profit forecast and reported second- quarter profit and sales that missed analysts' estimates.

"We continue to look for opportunities to invest in price," Wal-Mart U.S. chief Bill Simon said at a Goldman Sachs conference last week. "A great example for us is adult beverages. We have been continuing to move prices lower on that and seeing returns in the form of market-share gains in that category."

While the markup on beer at the Los Angeles-area store was less than 1 percent, Wal-Mart sold Coca-Cola 20-ounce bottles for 29.9 percent above cost, according to the data. Cereals such as Quaker Quick Oats and Honey Nut Cheerios were marked up 32.5 percent and 16.6 percent, respectively.

Deisha Barnett, a Wal-Mart spokeswoman, said pricing is determined market by market and declined to say whether the markups were nationally representative.

"This is nothing new that we're investing in price in adult beverage," she said in a telephone interview. "Grocers have long invested in this to drive traffic."

Wal-Mart's gross margin, the percentage of sales left after the cost of goods sold, was 24.7 percent for the quarter ending July 31. Target's gross margin in the quarter ended Aug. 3 was 31.4 percent.

A year ago, Chief Merchandising Officer Duncan MacNaughton told 500 alcohol industry representatives attending an "adult beverage summit" at Wal-Mart's Bentonville, Ark., headquarters that the company would discount alcohol as part of its strategy to gain share in the category. Wal-Mart has since discounted a range of mainstream and craft beers, doubled the number of alcohol buyers to 12 and cleared more shelf space to promote alcoholic beverages.



 

1
Text Only
Community News Network
  • Affirmative action ruling challenges colleges seeking diversity

    The U.S. Supreme Court's support of Michigan's ban on race-based affirmative action in university admissions may spur colleges to find new ways to achieve diversity without using racial preferences.

    April 23, 2014

  • A 'wearable robot' helps her walk again

    Science is about facts, numbers, laws and formulas. To be really good at it, you need to spend a lot of time in school. But science is also about something more: dreaming big and helping people.

    April 23, 2014

  • Cuba is running out of condoms

    The newest item on Cuba's list of dwindling commodities is condoms, which are now reportedly in short supply. In response, the Cuban government has approved the sale of expired condoms.

    April 23, 2014

  • The waffle taco's biggest enemy isn't McDonald's. It's consumer habits.

    Gesturing to Taco Bell, Thompson said McDonald's had "not seen an impact relative to the most recent competitor that entered the [breakfast] space," and that new competition would only make McDonald's pursue breakfast more aggressively.

    April 23, 2014

  • Screen Shot 2014-04-22 at 4.42.47 PM.png VIDEO: Leopard attacks crowd in India

    A leopard caused panic in the city of Chandrapur when it sprung from the roof of a house and charged at rescue workers.

    April 22, 2014 1 Photo

  • The top 12 government programs ever

    Which federal programs and policies succeed in being cost-effective and targeting those who need them most? These two tests are obvious: After all, why would we spend taxpayers' money on a program that isn't worth what it costs or helps those who do not need help?

    April 22, 2014

  • In cuffs... 'Warlock' in West Virginia accused of sexual assault

    Police in West Virginia say a man claiming to be a “warlock” used promises of magical spells to lure children into committing sexual acts with him.

    April 22, 2014 1 Photo

  • Cats outsmart the researchers

    I knew a lot had been written about dogs, and I assumed there must be at least a handful of studies on cats. But after weeks of scouring the scientific world for someone - anyone - who studied how cats think, all I was left with was this statement, laughed over the phone to me by one of the world's top animal cognition experts, a Hungarian scientist named Ádám Miklósi.

    April 22, 2014

  • McCain 1 House Republicans are more active on Twitter than Democrats

    Your representative in the House is almost certainly on Twitter. Your senator definitely is. But how are they using the social network? Are Democrats more active than Republicans, or vice versa? Who has the most followers on the Hill?

    April 22, 2014 1 Photo

  • Do your genes make you procrastinate?

    Procrastinators, in my experience, like nothing better than explaining away their procrastination: General busyness, fear of failure, and simple laziness are just a handful of the excuses and theories often tossed around. Now researchers from the University of Colorado Boulder have added another option to the list: genetics.

    April 21, 2014

Poll