Video: Wal-Mart influencing battle of breweries

With a strategic plan to double its beer sales in the next three years, Wal-Mart Stores Inc. plans to sell certain brands of beer at “razor-thin margins” and “even at cost,” according to Bloomberg News.
 
Bloomberg reporters got a rare glimpse at Wal-Mart’s alcohol pricing strategy through internal documents of the megaretailer. According to Bloomberg’s review, the markup on a 36-pack of Coors Light cans at a Los Angeles-area store was 0.6 percent, compared to 16.2 percent for a package of Flaming Hot Cheetos.

“Retailers are always on this see-saw between lower prices to drive demand and higher prices to try to build their margins,” Bloomberg’s Duane Stanford said during an interview on Bloomberg Television’s “In The Loop” about the $45 billion highly competitive alcohol industry. “One of the ways you do that is to get people into your store. As they come in, they will buy other items as well.”

Factoring all sales, Wal-Mart’s gross margin was 24.7 percent for the quarter ending July 31. By comparison, Target’s gross margin – the percentage of sales left after the cost of goods sold – in the quarter ended Aug. 3 was 31.4 percent, Bloomberg reported.

Read more at Bloomberg.