Will a Rising Corona Lift Other Beers?

Gambrinus pricing action could provide “tailwind” for domestics, imports, analysts write.

Two leading beer business analysts on Thursday opined that Gambrinus Co.’s move to increase the price of Corona Extra by 6 percent -- its first hike in three years -- could enable other brewers and importers to boost prices.

Morgan Stanley analyst William Pecoriello noted in a report that if the “Gambrinus increase is passed through it would be a positive for the industry (pricing umbrella).”

Carlos Laboy of Bear Stearns said:

This move is also likely to raise the pricing umbrella for the entire industry, a tailwind for domestic and import retail pricing, positive for Molson Coors, SABMiller and Anheuser-Busch. All three major domestics can now feel free to bring up the pricing on the major domestic brands, especially those in the premium light segment (Bud Light, Miller Lite, Coors Light).

Raising the pricing umbrella would be significant. In some markets, the relative price of the two leading imports -- Corona and Heineken -- had fallen to the extent that they were competing more directly with, and putting pressure on, premium domestic beers. It bears watching to see if this narrowed price gap remains after all the different players make their moves.

Another big question is whether consumers will balk at paying more for Corona. Laboy points out that “Traditionally the Corona brand has been resilient during price increases and we expect it will be so again.” He does note that the “Great Corona Shortage of 2006” (Beer Marketer’s Insights’ phrase) could mean the brand could lose end-cap promotional activity – and sales – later this summer.