Cars, Beer: Discount Me In.

If you thought the discounting wars and market share battles in the auto industry were cutthroat, check out what's been happening lately in the beer category.

Miller Brewing, flush with sales data from one of beerdom's biggest selling periods, shot out a statement last week declaring that the discounting by its chief rival, Anheuser-Busch, was ineffective during the weeks before and after July 4. The Milwaukee brewer, which has had no qualms about assailing Bud Light and Budweiser in its advertising, now has two press releases under its belt noting the market share losses of the category's top two brands and the Michelob franchise in the wake of Miller Lite gains.

Miller's June statement admitted that it had been "out-executed" by its St. Louis rival's pricing moves--the entire Miller portfolio declined during the Memorial Day period--and thus it would unleash TV spots with explicit comparisons to Bud Light. A-B's vp-sales and marketing, Mike Owen, said it was unfortunate that SABMiller would resort to negative attack advertising, which he said shows that their brands can't attract consumers on their own merit.

Last week, Miller cited ACNielsen supermarket and convenience store data showing that its market share was flat as Miller prices rose, while A-B lost share despite slashing prices. Dissecting further, the Miller folks note that Miller Lite growth was just a tad behind that of higher-priced imports, and that Bud Select was in effect cannibalizing sales of Bud Light and Michelob Ultra by mentioning low calories/carb attributes in its marketing.

"They've simply rented some very expensive share for a couple of months, and if they stick with it, they will have permanently gutted much of the profitability of their economy brands out of their system," said Miller's svp-sales, Doug Brodman. A-B's retort: "We will be releasing our sales and earnings July 27."

A Coors wholesaler said the whole industry's pricing is "insane," and Miller is the pot calling the kettle black because it has been discounting for the last 10 years. (That strategy changed when SABMiller assumed a majority stake in 2002.) Look for the next flurry of beer banter after Labor Day.

PHOTO (COLOR): Dollar for dollar: Beer biz, like autos, fights with price cuts.

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By Mike Beirne

Edited by Michael Applebaum