MillerCoors is proof that beer can make old foes new friends. Long-time rivals, UK-based SABMiller and US-based Molson Coors put aside their differences to merge their operations in the US and Puerto Rico in a joint venture, MilllerCoors. The #2 brewer in the US operates eight breweries and enjoys almost 30% of the domestic beer market. Its flagship brews are sold under the Coors Light and Miller Lite labels and import brews under Peroni and Molson Canadian. A division, the Tenth and Blake Beer Company, offers craft and import brews, such as Blue Moon, Foster's, and many others. MillerCoors also makes Sparks, a line of brand malt-based beverages. The company is 58%-owned by SABMiller with Molson Coors holding 42%.
Chicago-based MillerCoors operates eight major breweries in the US, as well as the Leinenkugel's craft brewery in Chippewa Falls, Wisconsin, and two microbreweries, the 10th Street Brewery in Mailwaukee and the Blue Moon Brewing Company at Coors Field in Denver, Colorado. The breweries are located n California, Georgia, North Carolina, Ohio, Texas, and Virginia.
The joint venture was formed to boost market share and spur stagnant sales through a larger portfolio of brands, as well as improve profits through cost savings from combining production, distribution, and marketing. The combined operation was also positioned as a more formidable competitor to brewing giant Anheuser-Busch, and to a lesser extent local and regional brands, than either SABMiller or Molson Coors could be on their own in the US. (The merger did not include Molson Coors business in Canada, or SABMiller's international business.)
The American alcohol market, however, is rapidly changing for large beer companies with increasing competition coming from wine, spirits, and craft beers and imports. In response, MillerCoors is continuing to reorient its portfolio to include a more diverse range of faster-growing, higher-margin premium brands, such as Blue Moon, Peroni, and Leinenkugel's. In fiscal 2013 successful product launches included Redd's Apple Ale, and the nationwide expansion of Leinenkugel's Summer Shandy.
Nevertheless, in fiscal 2013 (ended March) SABMiller reported a 2% slip in MillerCoors' domestic volume sales to retailers, driven by a difficult economy that continues to hurt mainstream consumers. Domestic volume sales to wholesalers also fell by 2%. The joint venture's EBITA (earnings before the deduction of interest, tax and amortization expenses) rose 1% as the impact of lower volumes, increased costs of goods sold and higher marketing spend was more than offset by strong revenue management and favorable sales mix. Premium light volumes were down by low single digits, as the continued growth in Coors Light was offset by a mid-single-digit decline in Miller Lite. Coors Light has benefited from the brand's "Refreshment as cold as the Rockies" ad campaign and focus on multicultural outreach, while Miller Lite has continued to invest i the "It's Miller Time" campaign. The Tenth and Blake division saw double-digit volume growth driven by Blue Moon and Leinenkugel's and their seasonal varieties, with Leinenkugel's Summer Shandy performing especially well.
Mergers and Acquisitiions
In November 2012, Foster's sold its 49.9% stake in Foster's USA LLC to MillerCoors LLC. As a result, Foster's LLC is now wholly owned by MillerCoors.