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 30.2 million hectoliters (800 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 about 40% of the beer sold in that country. In the US, MCBC does business through MillerCoors, a joint venture with 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 companies' popular brands. 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. The company also has a UK subsidiary, Miller Coors Brewing Company (UK) Limited.
Molson Coors International (MCI) sells products in developing markets in Asia, continental Europe (excluding Central Europe, which is part of the Europe segment), Latin America (including South America), the Caribbean (excluding Puerto Rico, which is part of the US segment) and Australia.
Its core product portfolio includes the Carling, Coors Light, Molson Canadian, and Staropramen brands.
Denver-based MCBC sells its products worldwide. Canada is the brewer's largest market, accounting for 40% of sales; while the UK represents another 34%. The company has more than a dozen brewery/packaging plants in Europe, six in Canada, and three in Asia.
Sales and Marketing
MCBC markets products through media advertising (television, radio, print), as well as tactical advertising (signs, banners, point-of-sale materials). The company spent $400 million on advertising in 2015, down from the recent peak of $486.4 million spent in 2014. The company's advertising spending was $458.5 million and $423.5 million in 2013 and 2012, respectively.
In the US, the company mostly distributes beer through a three-tier system consisting of manufacturers, distributors, and retailers. MillerCoors products are purchased and distributed to retail accounts through a national network of roughly 450 independent distributors. In Europe, MCBC may distribute through either a two-tier system (manufacturers and retailers) or a three-tier system, similar to the US.
In 2015, MCBC sold about 19% of its Canada segment beer volume on-premise, in bars and restaurants. The other 81% was sold off-premise, through convenience stores, grocery stores, liquor stores, and other retail outlets.
In 2015, MCBC's sales dropped 14% to $3.6 billion from $4.15 billion in 2014. Sales decreased in all the company's markets. The decline was led by a 16% fall in Canada, which felt the loss of the Miller brand agreement, a weak economy, and increased promotions from competitors.
The company's profit took a 30% tumble in 2015, falling to $359 million from $514 million in 2014. Cash flow also slowed in 2015, dropping to $696 million from $1.27 billion.
MCBC continues to follow a growth strategy that consists of building a stronger brand portfolio, delivering value-added innovation, growing the market share among its core brands, and growing its business in the above premium, craft, and cider markets.
In 2016, is selling its Vancouver brewery in favor of building a more efficient and flexible brewery over the next few years.
MCBC in 2015 agreed to buy the 58% of MillerCoors that it didn't own from SABMiller. The purchase was generated by the merger of AnheuserBusch InBev and SABMiller.
Moving more into premium products, the company in early 2015 began selling premium import brands owned by Heineken, including the Desperados, Dos Equis, Moretti, Sol, and Tecate brands.
Mergers and Acquisitions
In 2015 MCBC agreed to pay (US)$12 billion for SABMiller 58% stake in MillerCoors, the joint venture the company's formed in the US in 2008.
Also in 2015 MCBC acquired Mount Shivalik Breweries in India. As part of the transaction, it acquired entire brand portfolio, including the leading strong beer brand, Thunderbolt, and assumes direct control over brewing operations in Haryana and Punjab, as well as distribution for Thunderbolt in Bihar. MSBL is a significant player in the strong beer segment in India.
In an effort to boost its top line, MCBC has looked beyond its core markets to growth markets around the world. Its share of the Canadian and UK market has remained increasingly robust, but luring US beer drinkers is challenging. In 2010, the company's MCI division moved deeper into China, through a venture with Si'hai Brewing Company, as well as Spain, with Mahou San Miguel for Carling beer. MCI 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.