7-Eleven to challenge imports

7-Eleven convenience stores, part of the largest such chain in the United States, will sell their own label of imported beer. They plan to undercut prices charged by major import brands.

7-Eleven will introduce the Santiago brand beer in June, and company spokeswoman Dana Manley said about half the 5,300 stores nationwide are expected to sell the beer. It will be priced below well-known imports such as Corona and Heineken.

SABMiller, which owns Miller Brewing, will brew Santiago at its Cerveceria La Constancia, an SABMiller subsidiary in the Central American nation of El Salvador. Santiago will attempt to capitalize on the increased popularity of imported beers, Manley said.

Corona, the nation’s bestselling import, recorded volume sales of 6.8 million barrels in 2002, according to trade publication Beer Marketer’s Insights. That performance ranked Corona ahead of mainstream U.S. brands such as Busch Light, Miller High Life and Miller Genuine Draft, and was a 10% increase over Corona’s 2001 volume sales.

Convenience stores, supermarkets and other retail outlets have long offered private-label versions of a wide variety of grocery items. Private labels allow retailers to earn gross profit margins of 15% to 20%, as opposed to the 5% to 10% margins on other beer brands, according to Private Label Magazine.

Private-label beers have had difficulty getting established because of the intense competition among brands sold by the nation’s three largest brewers: Anheuser-Busch Inc., Miller Brewing and Adolph Coors Co.

Private-label beer sales for the year ending last May totaled just $4.5 million, about 0.1% of the market. By contrast, private-label soft drink sales for the same period totaled $645.7 million, about 6.3% of the market, according to Information Resources Inc.

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