SWOT Analysis Molson-Coors

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Molson-Coors SWOT

Company Overview

Molson Coors Brewing Company (Molson Coors) is a holding company engaged in the manufacturing, packaging and selling of malt beverage products, including alcoholic beer, cider, ales, stouts and lager. The company operates primarily in the US, Canada and the UK. It is headquartered in Denver, Colorado. Coors is the name of an ambitious 19th-century pioneer whose dream grew into the world's largest single-site brewery.

Molson Coors Brewing Company was founded in 1786 and Adolph Coors was founded in 1873. They survived prohibition in the US by bottling water. In 1959 they developed the aluminum can, a revolutionary way to package the product. In 1997, they developed the first non-alcoholic beer. In 2002, Adolph Coors acquired Coors Brewers and Molson Coors Brewing Company became one of the world's largest brewers. The company now has a diverse portfolio of more than 65 strategic and partner brands positions with signature brands including Coors, Coors Light, Molson Canadian, and Carling. The company operates around 18 breweries and a number of distribution centers in more than 30 countries, mainly in Canada, the US and UK.

Strengths

  • They are an innovative company, first by surviving prohibition in the US, when their product was deemed illegal, they began to bottle water to keep the company going. When prohibition was repealed, they returned to bottling alcoholic products and developed the first aluminum can.
  • The company also has licensing agreement for Canadian market with other leading brands, which include: Amstel Light Heineken and Murphy's, Asahi and Asahi Select, Miller Lite, Miller Genuine Draft, Miller Chill, Milwaukee's Best and Milwaukee's Best Dry, Miller, and Foster's.
  • They recorded revenues of $73.9 million in FY2009, an increase of 17.5% over 2008. The operating profit of the company was $754 million in FY2009, an increase of 21.2% over 2008. The net profit was $720.4 million in FY2009, an increase of 90.2% over 2008.
  • In 2006, they signed a five-year partnership with the San Diego Chargers, an American football team. The agreement provided them with multiple marketing opportunities, including outreach to San Diego's large military population and Hispanic consumers. Also in 2006, New Orleans Saints, another American football team, signed a two-year partnership with them.
  • In 2007, Coors Brewing introduced a package redesign and new advertising campaign for its Coors beer. In the same year, Coors Brewing rolled out its 2007 multicultural marketing strategy which was built on positioning Coors Light to the African-American and the US Hispanic populations.
  • In 2008, they launched Coors Light beer in Sweden.
  • In 2009, the company launced the new 8, 10, 12 and 16 ounce Coors Light and Coors Banquet Cold Activated Cans across the US. Carling, the UK's beer brand by Molson Coors, launched a 99 calorie bottle with 100% British barley. Also in 2009, Molson Coors (UK) and Cobra Beer formed Cobra Beer Partnership, a joint venture company for the manufacture and marketing of the Cobra beer brand across the UK.
  • In 2009, they partnered to introduce Coors Light beer in Costa Rica. They also introduced Coors Light in Trinidad &Tobago.
  • In May 2010, they agreed to buy a 51% controlling interest in a new joint venture with the Hebei Si'hai Beer Company for $40 million. They will have control over the Si'hai brewing operations, including its contract brewing business in China.
  • In 2009, revenues from other foreign countries (other than Canada and the UK) reached $118.8 million in 2009, an increase of 28.2% over 2008.

Weaknesses

  • Coors operates the world's largest brewery at its headquarters in Golden, Colorado, and distributes its 13 branded malt beverages in 30 countries worldwide--but 98 percent of revenues are generated in the United States, and that decreased by 97% in 2009 .
  • They rely on only a few popular brand names, which exposes the company to vulnerability when sales and economic regions fluctuate.
  • In 2009 company revenues decreased 36.5%. The Canadian region revenues decreases 9.8%; The UK revenues decreased 8.6%; revenues in the US decreased 97%; It seems that the revenues declined primarily due to weak demand in its core markets.
  • Molson Coors Brewing Company sold a 68% equity interest in its Brazilian unit, Cervejarias Kaiser to FEMSA Cerveza in 2006.
  • They are dependent on the raw materials of aluminum, wheat, barley and hops. The price of these raw goods have increased dramatically since 2008.
  • The perception in the US is that beer is for middle class or lower class members of society, making it difficult to sell their product to those with the most disposable income.

Opportunities

  • The Asian beer market provides ample business expansion possibilities, because they are a large consumer of the product and their populations are growing.
  • Creating more strategic alliances with other companies reduces risk as they move into foreign operations
  • Licensing agreements with theme parks, NASCAR racing circuit, Bowling Companies and/or complimentary food companies such as Johnsonville Brats.
  • They can produce a line of Organic Beer, Gluten free beer, or move into the higher priced market of beers.
  • Producing liquor or soda can also diversify risk, as sales of beer fluctuate.

Threats

  • Top competitors include: Ashai, Carlsberg, Heineken, Kirin, and Tsingtao.
  • Any significant increase in raw materials prices will negatively affect their margins.
  • Any significant decrease in the ability to obtain their raw materials will also affect their margins.
  • A negative perception that beer is not as healthy as other alcoholic beverages such as wine.
  • Economic recession in the US increases the sales of beer at first, but as the recession continues over a longer period of time, it may cause sales to decrease.

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