Wal-Mart Forgoes Profits to Become King of Beers

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Sept. 17 (Bloomberg) -- Bloomberg News' Duane Stanford reports that Wal-Mart is giving up potential profits to become America's largest beer retailer and entice customers who spend on products to compliment their alcohol purchase. He speaks on Bloomberg Television's "In The Loop."

How badly does walmart want you to buy your beer from its stores?

A not to sell you brands like but wiser, chorus, and others at razor and profit margins.

Maybe even at no profit.

What is so important about beer to walmart?

Duane stanford is with me now.

Good to see you.

Good to see you at the game the other day.

How unusual is this that walmart is selling beer in even at cost?

These companies and retailers are on the seesaw between lower prices to drive demand and then raise prices to build their margins.

You see a walmart that said we want to double our alcohol sales by 2016. one of the ways you do that is to get people into your store and make them look at your store as the place to get there here the cheapest.

They will come in and buy other items as well.

Why is beer so important to that?

Alcohol is a 45 billion dollar industry in the united states.

It is highly competitive.

Walmart has worked within this framework like every other retailer in the u.s. with where you got a three tier system.

He got manufacturers who have to sell to a wholesaler who then sell to retailers are you have patchwork across the country in terms of how to sell alcohol and walmart is one of the biggest retailers and has an advantage because they have a lot of stores in each of these markets.

They can really get a power position there.

Alcohol sales have great margins once you get people in the door.

They are not competing with any other beer distributors, they are competing with supermarket chains.

That's right, supermarkets like kroger and other chains are really beginning to understand the craft fair market and understand what kind of demand and margins you can get from that.

There is higher competition from that as well.

He cannot sit around as walmart and let kroger bring people in the door for craft beer and good prices on other beer because then they will go there for groceries as well.

Thanks so much for joining us.

Staying in retail, it's time for this versus that -- bloomingdale's versus the so- called wardrobers.

This is a wardrober.

This text has been automatically generated. It may not be 100% accurate.

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