Cheaper deals eat into Stella sales

Stella Artois, BudweiserThe maker of Stella Artois and Beck's has reported a 10% drop in lager volumes in the UK after it lost out to cut-price deals by rivals.

AB InBev, the world's biggest brewer, said the wet weather between April and June left beer drinkers less thirsty than usual and contributed to a decline in volumes across the industry.
But Stella and Beck's lost share to rivals in the quarter, as shoppers switched from bottles to cheaper deals on cans, although Budweiser was boosted by its recent sponsorship of the FA Cup.

The declines in lager were partly offset by a 20% rise in sales of Stella Artois Cidre, and a recently launched pear-flavoured version is set to boost the brand's prospects further.

The weak performance in the UK contributed to a 6.1% fall in underlying earnings in the group's western Europe division to 331 million US dollars (£210.7 million) in the first half of 2012.

Sales across the UK beer industry have come under pressure in recent years as shoppers make cut backs amid continued hikes in alcohol duty.

The Belgium-based group has hit back by launching Stella Artois 4%, which is weaker in strength than the main Stella product and its 'cidre' version.

The Stella brands have been supported with advertising campaigns highlighting their continental image. But the results suggest that in recent months consumers have been trading down to cheaper deals on cans, at the expense of the premium end of the market.

Overall group beer volumes fell by 0.5% in the second quarter of 2012 despite a push to promote Budweiser globally.

Underlying earnings rose 2.5% to 3.6 billion US dollars (£2.3 billion) although this was weaker than market expectations.

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