Coors, Molson Agree to Merge Breweries
 

Adolph Coors Co. and Canada's Molson Inc. announced a plan Thursday to combine their family-run breweries into the world's fifth-largest beermaker and better position themselves to pursue growing overseas markets.

With combined annual revenue of $6 billion, the newly formed Molson Coors Brewing Co. would be able to compete as rivals gain more global muscle and industry looks to new markets in China and South America amid a flat market in the United States.

The company would have a 43 percent market share in Canada, 21 percent in the United Kingdom and 11 percent in each of the United States and Brazil, where Molson has struggled.

Coors is third in the U.S. behind Anheuser-Busch and SABMiller while Molson is in a tight race with Interbrew SA's Labatt Brewing in Canada. In terms of both revenue and number of barrels sold, the combined company would be fifth globally.

"This transaction gives us the critical mass to be a real player in a rapidly consolidating industry," said Coors chief executive Leo Kiely.

The deal would merge two family-led breweries both founded more than a century ago and would unite brands like Coors Light, Molson Canadian and Carling.

"Since Molson's first issuance of stock in 1945, the Molson family has not wavered in its commitment to build a company that will withstand the test of time," Molson chairman Eric Molson said.

"Rather than shake our resolve, the reshaping of this industry has increased our determination to participate in that consolidation but on our own terms and on terms we believe would be favorable to all our stockholders."

The history between the two companies began in 1998 when they began selling each other's products in their respective countries. Several years ago, they began talking about a potential merger, negotiations that began taking shape three or four months ago, Kiely said.

Coors and Molson said their combination should generate $175 million a year by 2007 in cost savings by optimizing the brewery network in Canada, making material procurement more efficient, streamlining the organization and improving tax efficiencies.

Kiely said no decisions had been made yet on whether there would be layoffs.

http://www.forbes.com/business/manuf...ap1466820.html

Is this merger good for beer? Please discuss.

I have to think if there are changes made to the Molson operation it will hurt their Canadian market share.... but that aside I can be pretty sure that they will lose some share because of this... after all their entire marketing strategy over the past decade has been "I Am Canadian" with the advertising playing on Canadian nationalism... so any percieved connection with the American brewer will damage this image.

However the I can also see the beer industry becoming more diverse and healthy as a result... if people turn from Molsons they are more likely to switch to one of the micro-brews.

Re: Coors, Molson Agree to Merge Breweries
 

All I know is that anyone who touches this deal is going to be painting their pockets green.

-Rudey

To be honest, I think both companies' beer suck. Mixing them together can't make it that much worse. :p

Well other than watering it down :)

I agree. Even living in Colorado, I don't know anybody who actually drinks Coors -- with all the amazing microbrews that come from this state, why would you?!

For those of you who have heard me tell this story before, sorry.

My first night in Denver after moving from Detroit, I was in a downtown pizza place/bar. On the wall above the urinal it said, "Flush twice, it's a long way to Golden."

As a person who works for a small"er" regional brewer this quite honestly scares me. While AB controls over 50% of the market, everytime there is a merger it spells death for a few more local regional breweries.

Look at Rolling Rock...people still think it's a local beer here in southwestern pennsylvania and while yes it is produced locally it's owned by Interbrew a Canadian company and it isn't really a brand that's hurting. Interbrew is actually the BIGGEST globally with its most recent acquisition (which is slipping my mind right now- some brewing company abroad).

All I have to say is SUPPORT YOUR LOCAL BREWERY!

Really I'm off my soapbox now.

this is why I never read the beer related threads

I'll stick with Woodchuck.

I know lots of girls that like cider.

-Rudey

Isn't the biggest breweries Anheuser-Busch, with SABMiller being the second?

I totally agree - Sleeman's and the Brick Brewery ALL the way!

Haven't heard that one but that is TOO FUNNY! http://instagiber.net/smiliesdotcom/...ackeye/lol.gif

Yes.

http://media.mnginteractive.com/medi...merger0720.jpg

-Rudey

ummmm m. . . which brewery do you work for?


I sell beer/wine, and from the point-of-sale end we've seen a renaissance in craft brew sales. Bud sales are down 20% across the board in the midwest, their traditional stronghold, and our craft brews are up between 10 and 200%, depending on the distributor (put THAT in your pipe - the actual beer makes little difference, it's solely based on distributor and POS support).

The bottom line? If you're getting hurt by this merger, you need to change your strategy. The merger is happening precisely b/c of a shifting marketplace in which Coors has trouble competing, b/c the pie is being cut into many more pieces. Bud was around 71% marketshare just three years ago . . .

There are success stories and there are pending disasters - Rogue, in Oregon, is a total success story, while I personally feel New Belgium is shitting the bed w/ their inability to get Fat Tire etc through state ABDs and to new consumer bases. Which one is your brewery?

Why are you scared?

I read somewhere that even with the Canadian Identity advertising that Molson isnt doing that well and that Budwiser is becomming one of the top beers in Canada. While we may enjoy the Canadian commercials I dont think that we are 'buying' into it.

I don't feel comfortable posting where I work here although it's not that difficult to figure out. My real concern is for the regional breweries that are dying not craft brewers.

The last article I read did have interbrew being the largest...maybe asset wise? Who knows. All I know is that I spend most of my days pushing a product that everyone claimes to love but doesn't support financially.

But I have real concern for ANY company (and there are a lot out there) that has such a high market share. Just goes to show that people buy into crappy product as long as you've got "funny commercials". I lose faith in the human race more and more each day.

Hey Kappaloo:

I assume your from Kitch/Waterloo? Dont they make redcap from there? Just curious...

Students are cheap-yes but from my experiance at a bar will not just order what is cheap but what they really like-For example: I could buy Canadian but I dont-i spend more for Keiths etc.

Has anyone had KLB (Kawartha Lakes Brewery) rasberry wheat?

keep in mind that you are probably the minority here. Yes some young adults DO spend the money, but many do not.

How do you explain PBR?

Anyway enjoy your beers!

I'm somewhat of a beer connaissuer. Prefer microbrewery stuff by far. I don't drink a whole lot, so I don't mind paying for quality when I do drink (and when I'm not drinking something I concocted).

I agree with that statement though. I have a tough time taking friends out "for a beer" because we have very different ideas of what going out for a beer means. They look 25-cent longnecks while I want to go somewhere like Tapwerks (with over 100 beers on tap).

Over here in Oklahoma, I'd say your premium beer sales at best account for 10% of overall beer sales.

Well I guess Keiths isnt really 'premium' I certanly wouldn't compare it to Stella but I meant really that in my experiance I am not just going to buy Canadian because its cheap i will spend a litle more on Keiths or Moosehead (CND brands-higher quality..middle price) instead of drinking crap...but thats just me!!

I think that's not just you and me... that's the mentality for many university level Canadians... I've heard of bars selling more "domestic premium" (that's Moosehead and company) than plain ol' domestics on "normal" days. Hence the invention of cheap domestic pitchers and $2 domestics days!

(ps, yes I'm from KW - Oktoberfest anyone?)

Besides, it's posh to be a beer snob : "I don't _drink_ Labatts!" mostly a fad. I see mostly "older" (read 35+) people drinking domestic beers.

Oh man, I have a craving for beer!

As for microbrews (going on a tangent here)... when I was in Denver for my grad trip - we ordered a microbrew. We were warned that it was very heavy. Now, I rather enjoyed it, but it was not a heavy beer. It was waaay lighter than any beer I drink normally!

I think with beer, a lot of people stick with what they know and like.
And if you start off drinking cheap beer that's probably what you'll always drink.

When I was in Cleveland 2 weekends ago, my uncle had a BBQ for his co-workers. My aunt decided to pick up a case of international beers. There was Australian, Irish, Dutch, German, etc, etc..

My aunt and mother and I were interested in sampling the different beers, but my uncle said to my aunt that she shouldn't have bought that because his co-workers wouldn't drink it.
When the co-workers arrived and were offered the imported beer they refused and said all they wanted was a Bud.

I'm not a regular beer drinker and the cheapest stuff I'll drink is Canadian. But I prefer the imported beers, when I actually do drink beer.

I think beer is just one of those things where people like to stick to what's familiar. Just my opinion though.

They won't drink those froo-froo beers.

Bastards.

Froo-froo is the only way to go.

Yeah, I'm a beer snob.

Beer snobs unite!

The KLB Raspberry Wheat is a great beer, quite popular with the recent alumns and older members of the chapter.

I think most people order Canadian, Ex, or Blue at the clubs because it's easier and sure to be stocked... but when buying for personal consumption taste is more of a factor... although again if their is a party or whatever the standard is the way to go because everyone is sure not to mind the beer.

As for Molson's (or Labatt's) slipping share despite the cool commercials... they had more or less a monopoly nationally for a three decades or so... but now the smaller companies and even micro-brews are available outside of their local markets, and people with the increased access to taste have simply been able to explore the increased taste options... the "I Am Canadian" commericals were simply an attempt to stem the tide of customers leaving...

I am worried that the funny or intelligent commericals will now become the "babe magnet" crap that Budweiser and Coors put out...

RA:

Glad you like KLB-its from Peterborough my hometown (also curently known to most people as Atlantis...lol)

Not to sound like a feminist BUT i would like to see a beer commercial aimed at woman (besides the low carb)..that would be interesting...

Oops... btw, yes, I do believe RedCap is made in KW. :)

Kappalou:

Are you orginally from Kitch/Waterloo? Just curious i have family in that area...in Drumbo (yes ppl there is a place called that!) and Ayr and Paris...

Yeah Pete's a mess still, but looking a hell of a lot better than it did a couple of weeks ago... I was their helping my younger brother's girlfriend clean-up her family's place.

I too would love to see commercials that weren't "beer attracts bikini babes" :rolleyes:

OK - let's just pretend you work for a smallish, cultish, regional brewery with a strange, hard to pronounce name that begins w/ a 'Y' so that we can reference your brewery in an indirect fashion for our hypothetical conversation . . . now, I just don't feel that I understand your concern. Craft brews, with super-small (read: sub-regional) distribution are destroying (compared w/ their previous numbers), enough to worry the majors. Enough to force strategic mergers. Remember - Bud's numbers are DOWN!



Worldwide, Interbrew is 6th. Bud is first, then SABMiller (off Bud's website).

Obviously, the region may love that 'y' beer . . . but let's be honest: with the pricing and substandard distribution, along with the depressed economy of the region, how can you blame anyone? It's the Pabst concept - they started regional, then busted nationwide decades ago, and exist today solely for that region. So, everyone has to change to compete - merge w/ your friends at genessee, or create a distribution agreement w/ the new coors/molson, a la redhook and modelo.

If "y" beer is failing, it's not because of bud or this merger - these are acts to cut costs, remember, b/c both are losing market share.


Nah - it's b/c it's cheap, followed distantly by the advertising. Most people don't have a very refined beer palate, resulting in Bud and Miller dominating. However, we've obviously seen a huge increase nationwide in the number of people with a solid beer palate - how else can you justify the increase in craft brew sales, even at sometimes 4x the cost per bottle compared with large-run domestics?

ask yourself, then, why "y" brand isn't seeing these increases . . . is it a regional issue? is your product stuck in the middle of the palate, outshined by Grant's, Left Hand, and Harpoon, but still 'out-cheaped' by Bud? Or is it a need for better advertising, better POS (which I'll tell you DOES matter - ask your local Sierra Nevada rep), or simply a better product?

I don't have the answer, but Sierra did, and Grant's did, and New Belgium apparently does. Red Hook found one way, however conceptually distasteful, and Sam Adams provides the best possible example with their build-up to their position today.

Why isn't "Y" those guys?

**Now, don't take this the wrong way - every kid from PA or WV who i went to school w/ loved "Y" . . . but I just don't think this merger is bad for you, as much as it indicates the possibility for others to come in and just steal space from big brands. It's happening all around you guys, so it's def possible - I wish you guys the best of luck, and i'm absolutely sure you can bring it around and see the same advantages that these smaller (and ostensibly less powerful) brewers are seeing.

As a Canadian may I point out that said hypothetical "Y" brand is pretty good... wish it was available up here (well other than at super-specialty bars)