2007-02-02

Pending Sale Not The End Of Cheap Beer, Says Analyst

By John Burman
The Hamilton Spectator
(Feb 2, 2007)
Whatever else it may be, Lakeport's pending sale to Labatt Brewing is not the end of cheap beer.

At least not yet.

While we probably won't hear much more from Lakeport chair and CEO Teresa Cascioli about "great beer at fair prices," the discount beer market she virtually created isn't going to disappear right away.

An industry analyst who asked not to be identified said he figures Labatt may gradually let the Lakeport brands slowly die out in hopes of introducing discount beer drinkers to more mainstream brands.

"This is absolutely a strategy to gain pricing discipline in the market," he said. "Lakeport's been undercutting them. If they slow that down, they can get people to pay more."

They can also cut production, making Lakeport harder to find in stores.

"Then they transition (drinkers) into their mainstream beers," he adds.

But Jim Brickman, executive chair and founder of Brick Brewing in Waterloo, says he's going to miss Cascioli because it was fun when Lakeport and Brick were out there "snapping at the heels of the big boys."

He plans to stay in the discount category with Laker -- "A buck a beer," because it provides margins that help support the company's first love, premium beers.

He thinks he'll still have company in the discount niche.

"No one's going to up Lakeport's price," he said.

If they did, another brewer will just fill the niche.

Whether Hamilton beer drinkers will feel jilted and switch to other discount brands remains to be seen, says Marvin Ryder, a lecturer of strategic market leadership.

"If someone wants to protest, take a stand against the big guys, there are other discount brands they can buy if they want to do that. This is not the end of discount beer."

jburman@thespec.com 905-526-2469

With files from Naomi Powell, The Hamilton Spectator

Used with permission from The Hamilton Spectator, www.thespec.com Copyright The Hamilton Spectator. All rights reserved.