Adolph Coors
Team Pirates
Spring 2008
Major U.S. Company Market Shares: 1977-2008 (% of total
domestic volume)
60.0%
50.0%
40.0%
A&B
MILLER
30.0%
COORS
20.0%
10.0%
0.0%
1977
1981
1985
1992
2001
2003
2008
Competitive Advantage in 1970s
High entry barriers
- Economies of scale
- Differentiation and Customer
relations
Suppliers and buyers
have weak positions
- Good wholesalers and retailers
relations
- Vertical integration
Few threats from
substitute products
Moderate rivalry
- Competitors
- Few categories
- Differentiation
- High growing industry
Five Forces of
Competition
What went wrong ?
I.
Operating Performance
II. Slow growth
Major Brewers’ Operating Income (per Barrel)
Barrels Sold
For 1977
Revenue
COGS
Advertising
Other SG&A
Total Operating Cost
Operating Income
For 1985 in $’s
of 1977
Barrel Sold
Revenue
COGS
Advertising
Other SG&A
Total Operating Cost
Operating Income
I.
II.
Low Revenue
Operating Cost too high
•
•
•
Production Cost
Transportation Cost
Advertizing Cost
A&B
36.6 Millions
Miller
24.2 Millions
$46.01
$36.61
$1.99
$2.79
$41.39
$45.87
N/A
$2.48
N/A
N/A
$34.84
$24.52
$2.10
$4.35
$30.97
$41.56
$28.98
$1.09
$2.97
$33.04
$4.62
$4.38
$4.03
$8.52
A&B
68 Millions
Miller
37.1 Millions
Heilman
6.2 Millions
Heilman
16.2 Millions
Coors
12.8 Millions
Coors
14.7 Millions
$43.32
$29.02
$3.88
$4.04
$36.95
$39.11
N/A
$4.53
N/A
N/A
$29.73
$21.33
$3.56
$2.56
$27.45
$41.10
$27.70
$6.28
$3.58
$37.56
$6.37
$2.06
$2.28
$3.55
Slow growth compare to Competitor
Major U.S. Brewers' Sales 1977-1986
(millions of barrels)
70
Sales Growth
70.00%
60.00%
60
50.00%
50
40
A&B
30
MILLER
COORS
20
40.00%
A&B
30.00%
MILLER
20.00%
COORS
10.00%
10
0
1977
I.
0.00%
1981
1983
1985
Method of production
• Only one facility
• Not able to produce in advance
II. Exposition on U.S Territory
III. Diversity of products available
-10.00%
1981
1983
1985
Factors to Coors Stagnation
 Unfocused strategy
 From one brand to the fall
 The “cult” of Coors
 The Water Mystique
 Coors’ image problem
 AFL-CIO Strike and boycott
 Coors’ and the minorities
 Coors’ family views
Coors Banquet
 One brewery
 Only distributed in the West (11
states)
 Product Differentiation Strategy


Only in draft
Uniqueness of ingredients “Rocky
Mountain Springwater”
Coors’ Mystique
 Burt Reynolds in the movie
“Smokey and the Bandit”
 Gerald Ford and Henry
Kissinger
 The In n’ Out effect
Coors’ Expansion
 Geographic Expansion
 Roll out in the fifty states
 Product Expansion
 Killian, Greystone, and Shulers
 Line Expansion
 Light beer, ice beer, dry beer, red beer, …
 Production Expansion
 Opening of a new packaging plant in Virginia
The Water Mystique
The original Coors’ can
 Expanding nationally actually
hurt Coors’ image.
 Cross-brewing
 Too much availability led to
Coors’ commonness
AFL-CIO Boycott
 Lasted from 1977 to 1987
 Market share dropped in California from 40% to 10%.
 AFL-CIO represents 13 million workers
 Union representative reached out to minorities organizations,
universities, stadiums, and entertainment parks.
 Wanted to show that Adolph Coors is “antilabor,
therefore antipeople”
and
 N.E.A and N.O.W joined the boycott with more than 5
million people.
Unfounded accusations
 Anti gay, anti minorities, anti woman employment
practices
 Not eco-friendly
 Comments taken out of context viewed as racists
 Coors’ family contribution to conservative political
group
Boycott Coors
Recommendations
Diversification
Multipoint competition
Synergy
•Create a new market
•More value
•Miller & Coors vs. Anheuser
Busch
•Risk reduction
•Create a stronger brand
Focus Strategy
Focus more on consumer
needs
Wholesalers
Buyers
• Change production method
• More accessible
• “Freshness Policy”
• On-premise
• Off-premise
Focus Strategy
• Create new advertising campaigns
•
Focus on other segments of beer
•
Regionalize in terms of marketing and
activities
•
Create a low cost strategy
•
Create more facilities
sales
Coors Current strategy
 Engaged in a 3-part strategy in 2004
 (1) "Drive growth on Coors Light and Coors Original via a
full line of support, including over 20 television spots,
promotions, radio, out of home and print.”
 (2) "Support Keystone Light, Killian's, Zima, Blue Moon
and Mexicali with local programming.”
 (3) "Respond aggressively to low-carb opportunities."
 Merged with Molson in 2005
 Merged with SABMiller in 2007
Coors’ Current strategy
 Direct competitor to Anheuser-Busch after the merger
with SABMiller.
 Expansion in developing market, such as Asia and
Africa
 Goes up against the heavy marketing strategy of
Anheuser-Busch, which spends twice the advertising
expense of Coors, $2.5 billion and 50.6% of the market
share.
Thank you!