Ah, the signs of summer: Road construction, big-city smog warnings and…cheap beer! Yes, folks, once again, the marketing generals at Canada’s two largest breweries are blasting away at each other with the Howitzer of marketing tactics in the bloody battle for market-share dominance: The promotional price discount!
Labatt this week announced that it will offer Ontario beer drinkers a $4 discount on cases of most of its brands between July 26 and Aug. 1. Meanwhile, Labatt’s arch-foe, Molson, is said to be preparing to announce its own $4-off promotion any time now. Both breweries have already run short-term price promotions this summer.
What’s most interesting about this latest round of dueling markdowns is that neither combatant seems particularly keen on the practice.
Labatt executives have been quoted in the media as saying they’d rather focus on long-term brand building than keep up their margin-busting promotional efforts.
And, in an interview with this publication, Molson COO Dan O’Neill laments the fact that both his own brewery and its main competitor seem to be locked in an inescapable spiral of promotional one-upmanship that is doing nothing to improve the fortunes of the beer category as a whole. In fact, the former Heinz and Campbell Soup exec points out, the ceaseless continuation of price promotions and in-pack giveaways will inevitably have a negative effect on the brand equity owned by both Molson and Labatt…if it hasn’t already.
The time is nigh, O’Neill suggests, that one of the breweries take the lead and withdraw from the practice of ‘shifting people around for one-time purchases’ and focus, instead, on creating products and brand images that will stimulate growth of the entire beer category. The problem is that neither he nor his rivals at Labatt appear prepared to take that first courageous step. They both seem to want the other to act first.
As everyone knows, it’s one thing to talk about what needs to be done to remedy any undesirable situation, and quite another to take action that actually implements change. If O’Neill and his counterparts at Labatt are serious about their avowed belief in the primacy of brand building, now is the time for them to demonstrate that belief and modify their marketing habits.
Otherwise, as the promotional battles rage on between them throughout the hot summer months, and descend into attrition, Molson and Labatt are going to have to come to grips with the fact that any victory they ultimately lay claim to may be Pyrrhic in nature.
David Bosworth
dbosworth@brunico.com
