Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from [John Stabo - Flintridge Capital].
[John Stabo - Flintridge Capital]
With regard to the price increases, I noticed that Anheuser-Busch is talking about pulling their price increases forward and I think some others have talked about pulling year-end price increases forward as well. How does that play into your thinking with regard to pricing going forward? And then could you also give us a sense of how the price increases in the second quarter may have impacted volumes? Do you have an idea of how elastic the demand was relative to the price increases you put in in the second quarter?
David J. Mickelson
I’ll talk for a little bit and then maybe Terry may want to add something to this. But the one good aspect with all that’s going on is that the pricing umbrella, the cost side has impacted the entire beer industry so the pricing umbrella has remained in place so that there’s strength that the large domestics continue to come up and strengthen their pricing and the imports are poised to do the same thing with some of the same issues. We do have the ability to go up. The question is how high can we go, and in the Seattle market as just one example the front line price of our products is $9.99 a six pack. In many parts of the country you may see it at $7.99 perhaps. Maybe that’s on deal; maybe it isn’t. But it’s challenging at that $9.99 price point without some kind of ad activity or post op or discounting against it to get a lot of activity. That doesn’t mean the market won’t move that way to a degree but early reports suggest that we get up to a limit there where you might start seeking alternatives to that that are a little less expensive. Right now there seems to be some room in there. The question is who all gets to grab that margin because I think the retailer takes some and the wholesaler needs some and certainly the brewery needs some. So in terms of volume in the second quarter I think there were in certain markets definitely the impact of raising prices and a softening of demand. But I think it’s hard to separate from fuel prices at the same time and other economic factors.
Terry, do you want to add anything?
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