By James Atkinson
The decision by retailers to move away from aggressive, deep discounting of beer was welcome news for the entire liquor industry, according to Carlton & United Breweries (CUB) CEO Ari Mervis.
In an interview with TheShout, Mervis said his previously stated view that consumers were happy to pay more for beer had been borne out in recent months.
"Historically there has been a very fierce, competitive race to the bottom in terms of pricing," he said.
"Different retailers have always tried to ensure that they remain the cheapest retailer when in fact the consumer has been happy and willing to pay slightly more than the price they've offered it at."
"I think there has been a little bit more price discipline across the market and we've seen retailers have been charging slightly more and consumers have been prepared to spend a bit more," Mervis said.
"We need to ensure that there's a sustainable margin for all the participants through the value chain."
Blended margin is key
In any case, Mervis said it's important for retailers to consider their margins on mainstream beer in context.
"Sometimes they don't look at what is a blended margin," he said.
"They'll take the margin that they make out of selling a 24-pack of stubbies, but when you blend it with how many six-packs they sell or how many single units they sell, the blended margin is a lot higher than the five per cent [for a 24-pack]."
Mervis acknowledged that in some demographic areas the proportion of cases sold is higher than that of single units or six packs.
"But generally you will find always that the equivalent of about three six packs is the same price as a 24-pack," he said.
"So if they are able to sell six-packs, bring them to the front of the store and amplify that, they tend to get a higher blended margin."
Is Ari kidding himself I dont think anything has changed here is a list of products I have brought from the chains in the last couple of weeks VB 30 Cans $39.25 VB Stubbies $36.90, Cascade Light $28, Carlton Draught $36.66, Crown Lager $40, Strongbow $38.90 and that is just from the Fosters products.
Is ari alright since the 1st of july 2013 all the major chains have sold c/draught, c/dry, vb under 38.00 dollars can u just imagine an independant liquor outlet with a recommended retail of $48.00 where do u think they are going to go, uncle dans(the small business killer that is supported by cub), that ari and his company support more behind the scenes while they get there reps to tell us we are not funding this , how many 6 packs does he think we are going to sell(blended margin yeh right)the small retailer should sell a slab for $48 and sell there 6 packs for $10 work that blended margin out ari.