The company that makes Budweiser, Beck's and Stella Artois brands of beer is lowering its alcohol content in order to save millions in taxes.
AB InBev is lowering the alcohol content levels from 5 percent down to 4.8 percent. In a report by The Grocer, they say the reduction will only affect sales in the UK. Ab InBev says they are making the change to save millions on production costs, which will allow them to avoid a 7.8 percent price increase that is being imposed by some other beer makers.
"Our decision to bring Stella Artois, Budweiser and Beck's to the UK market at 4.8 percent abv during 2012 is in line with evolving UK category trends," an AB InBev spokeswoman told The Grocer.
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Industry insiders said some retailers had rejected demands for price increases and producers were cutting abv to offset costs, retain price points and shore up profitability.
"Some of the major mults have denied price increases for three years, and the brewers' answer is to shift into smaller bottles and move from 5% to 4.8%," said one industry source.
It has been estimated that cutting Stella Artois' abv by 0.2% would save AB InBev about £8.6m a year in duty, based on its off-trade sales alone [Nielsen 1 October 2011].
However, it would need to persuade big customers there was something in it for them too, said Tim Wilson, MD of market analysts Wilson Drinks Report, with money being invested back into the brand.