Adolph Coors

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Adolph Coors

• Team Pirates
• Spring 2008

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(No Transcript)
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Competitive Advantage in 1970s
Suppliers and buyers have weak positions - Good
wholesalers and retailers relations -
Vertical integration
High entry barriers - Economies of scale -
Differentiation and Customer relations
Few threats from substitute products - Few
categories - Differentiation

• Moderate rivalry
• Competitors
• - High growing industry

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What went wrong ?

• Operating Performance
• Slow growth

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Major Brewers Operating Income (per Barrel)
  AB Miller Heilman Coors
Barrels Sold 36.6 Millions 24.2 Millions 6.2 Millions 12.8 Millions
         
Revenue 46.01 45.87 34.84 41.56
COGS 36.61 N/A 24.52 28.98
Advertising 1.99 2.48 2.10 1.09
Other SGA 2.79 N/A 4.35 2.97
Total Operating Cost 41.39 N/A 30.97 33.04
         
Operating Income 4.62 4.38 4.03 8.52
For 1977
  AB Miller Heilman Coors
Barrel Sold 68 Millions 37.1 Millions 16.2 Millions 14.7 Millions
         
Revenue 43.32 39.11 29.73 41.10
COGS 29.02 N/A 21.33 27.70
Advertising 3.88 4.53 3.56 6.28
Other SGA 4.04 N/A 2.56 3.58
Total Operating Cost 36.95 N/A 27.45 37.56
         
Operating Income 6.37 2.06 2.28 3.55
For 1985 in s of 1977

• Low Revenue
• Operating Cost too high
• Production Cost
• Transportation Cost
• Advertizing Cost

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Slow growth compare to Competitor

• Method of production
• Only one facility
• Not able to produce in advance
• Exposition on U.S Territory
• Diversity of products available

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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

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Coors Banquet

• One brewery
• Only distributed in the West (11 states)
• Product Differentiation Strategy
• Only in draft
• Uniqueness of ingredients Rocky Mountain
  Springwater

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Coors Mystique

• Burt Reynolds in the movie Smokey and the
  Bandit
• Gerald Ford and Henry Kissinger
• The In n Out effect

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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

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The Water Mystique

• The original Coors can

• Expanding nationally actually hurt Coors image.
• Cross-brewing
• Too much availability led to Coors commonness

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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,
  and therefore antipeople
• N.E.A and N.O.W joined the boycott with more than
  5 million people.

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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

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Boycott Coors
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Recommendations
Diversification
Multipoint competition
Synergy

• More value
• Risk reduction

• Create a new market
• Miller Coors vs. Anheuser Busch
• Create a stronger brand

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Focus Strategy
Focus more on consumer needs
Wholesalers
Buyers

• Change production method
• Freshness Policy

• More accessible
• On-premise
• Off-premise

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Focus Strategy

• Create new advertising campaigns
• Focus on other segments of beer
• Regionalize in terms of marketing and sales
  activities
• Create a low cost strategy
• Create more facilities

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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

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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.

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Thank you!