Soft drink price war quieter over Fourth

The soda price war between Wal-Mart and its competitors such as Publix and Kroger seems to have reached a stage of detente for the Fourth of July weekend, according to industry analysts.

After drastically dropping prices on Coca-Cola, Pepsi and Dr Pepper over Memorial Day, retailers are not being as aggressive on soft drink discounts this weekend. Average soda prices for July 4th -- including two-liter bottles -- are slightly below last year's levels, but the price-cutting is nowhere near as dramatic as a month ago, according to Connecticut-based Consumer Edge Research, which gathered data representing 15,000 stores across the U.S.

Prices for canned soft drinks are actually up. On average, cans of Coca-Cola are 3 percent more expensive for the Fourth of July than they were a year ago, according to Consumer Edge Research. Prices for canned Pepsi are 6 percent higher. Over Memorial Day, by contrast, retailers slashed prices on 12-packs of Coca-Cola and Pepsi by about 20 percent.

Consumer Edge Research said it recently found a couple of retailers selling 12-packs for below $2, "but for the most part, pricing appeared to be rational."

Beverage companies have said they prefer prices to rise gradually rather than drop dramatically, even though the latter may spur sales. So the move away from cutthroat pricing may please Coca-Cola, PepsiCo and others.

"Pricing looks like it's starting to firm up a little bit," said Morningstar analyst Phil Gorham. He said stores may be testing shoppers' willingness to spend, betting that average spending and traffic in the aisles will hold up even without rock-bottom prices.

This is a key weekend for retailers and for beverage companies. The four-week period surrounding the Fourth of July typically has the lowest prices for carbonated soft drinks, according to Beverage Digest. Not surprisingly, it also boasts the highest sales volume.

Wal-Mart, the world's biggest retailer, is getting a lot of attention from Wall Street analysts and suppliers such as Coca-Cola for its plans to use intense price cuts this year on soft drinks and a variety of other products. The rollbacks will be heavily seasonal, such as on chocolate around Halloween, a team of J.P. Morgan analysts predicts. Over Memorial Day, Wal-Mart featured Heinz ketchup at $1 for a 40-ounce bottle and 24-packs of Coca-Cola, Pepsi or Dr Pepper for $5.

The analysts said the promotions on soft drinks should lead to better sales volume for beverage companies at Wal-Mart stores in the second and third quarter, although some of those sales are probably being pulled out of supermarkets. Wal-Mart's price rollback initiative "now appears to have as much bite as bark," according to the report.

Holiday soda wars

Even if prices haven't dropped to the levels of Memorial Day -- when Wal-Mart sold 24-packs of soda for as little as $3.77 -  shoppers can still get deals this weekend. Here are specials offered this week in some Atlanta-area stores:

-- Wal-Mart: 24-packs of Coca-Cola, Dr Pepper and Pepsi for $5