British supermarket chain Tesco PLC is axing a whopping 57% of the 53 beer brands from around the world that the grocery and general merchandise retailer had in stock in the beginning of 2017.
U.K.-based Tesco will cut 30 mainstream beer brands including Heineken NV’s (HEINY) Amstel, Sol and Tiger brands, planning to replace them with trendy craft beers, ciders and lagers. (See also: Heineken’s Taverns Takeover Faces Inquiry.)
Post-Brexit Price Hike
The supermarket chain has pulled more than half of all Heineken beers from its stores on an expected post-Brexit price hike threat. The grocer says the review of Heineken brands is part of the company’s larger initiative to bolster its craft offerings, although it is speculated that price negotiations also have a lot to do with the decision. “We frequently review our ranges to ensure they meet the needs of customers,” said a Tesco spokesperson. “We continue to offer customers a great range of beer, lager and cider.”
In October, Tesco discontinued hundreds of products from its shelves after a battle with Unilever (UL) over a 10% price hike. The issue, nicknamed the ‘Marmite row” was pointed out as the first sign of the cost of Brexit on food producers as a pressured U.K. sterling results in increasingly expensive imports. While the wholesale pricing dispute was “successfully resolved” in 24 hours, the grocer momentarily removed a variety of popular products from its stores, including PG Tips, Pot Noodles and Hellman’s Mayonnaise.
The discount retailer for a variety of consumer products including online groceries, homeware, electrical products and clothing could see its top line benefiting from a changing consumer preference for craft beer over traditional lager as it restocks its shelves. Major beer companies themselves, facing declining sales growth, have reinvested in new innovative flavors, rebranding pushes and marketing campaigns to harness a “more sophisticated” Millennial palate for local beers and spirits. (See also: Heineken Wants Drinkers to Become Craft Beer Snobs.)