Molson Coors Brewing Company (MCBC) drinks with the big boys: the company is one the world's largest beer makers by volume. Operating through its subsidiaries, MCBC produces some 25 million hectoliters (660 million US gallons) of beer a year. The beer maker's portfolio of brands, led by Molson Canadian and Coors Light, dominates the Canadian market, accounting for 40% of the beer sold in that country. In the US, MCBC does business through MillerCoors, a joint venture 58%-owned by SABMiller. MillerCoors, the second-largest US brewer by volume, markets Coors, Coors Light, and Molson brands. In addition to Canada and the US, MCBC operates in the UK, and as Molson Coors International (MCI), in developing markets.
The MillerCoors joint venture, anticipated to take market share from US beer behemoth Anheuser-Busch, combined both company's popular brands. MillerCoors, which also handles beer sales in Puerto Rico, boasts more than half a dozen breweries including Molson Coors' plant in Golden, Colorado, the world's largest single-site brewery. The combination of MillerCoors added several new business arrangements, too. The venture brews, packages and ships beer for the Pabst Brewing Company under contract. A deal with Miller Brewing Company (a US subsidiary of SABMiller) enables MCBS to brew, market, and sell Miller brands abroad, as well.
In 2012, the company reported revenue of $3.9 billion, up 11% from the prior year. The improved results were primarily driven by the 2012 acquisition of Central European brewer StarBev. Conversely, however, costs associated with the financing and acquisition of StarBev reduced net income about 35% (to $443 million).
In an effort to boost its top line, MCBC is looking beyond its core markets. Its share of the Canadian and UK market has remained increasingly robust, but luring US beer drinkers is challenging. To this end, MCI moved deeper into China, through a venture with Si'hai Brewing Company, as well as Spain, with Mahou San Miguel for Carling beer. MCI has also launched Coors Light in Vietnam and Russia, and entered Ukraine, Eastern Europe's second-largest beer market, through a joint venture with local brewer Obolon Company.
MCBC, meanwhile, is distributing GRUPO MODELO's brands in the UK and Japan. The arrangement builds upon a joint venture, Modelo Molson Imports, to import, distribute, and market the Corona and Modelo beer brands in Canada. Other longstanding deals are held with Heineken N.V. to import, market, and sell Heineken products in Canada, with Asahi to brew the Japanese beer for the US market, and with Foster's to produce the Australian beer abroad.
Some ventures, however, have required an extraordinary investment. The company extended a $35 million rescue package to its troubled joint venture in India in mid-2011. MCBC holds a controlling stake in Cobra India, renamed Molson Coors Cobra India, with the Billimoria family (founders of Cobra Beer). Cobra Beer is stocked in more than 6,000 restaurants and in all major supermarkets in the UK. To further strengthen the business, MCBC and Cobra in 2011 established a joint venture to brew and distribute Cobra Beer in South Asia.
Mergers and Acquisitions
More significant, MCBC acquired StarBev L.P. for €2.65 billion ($3.54 billion) in mid-2012. StarBev operates nine breweries in Central and Eastern Europe and boasts a top three market share won through its more than 20 brands; the addition expands MCBC's portfolio of champion regional labels and furthers its presence in an increasingly thirsty market.