Stillwater News Press

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September 17, 2013

Wal-Mart alcohol pricing brews sales

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.

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