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Molson Coors : company profile

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Molson Coors was formed in 2005 from the merger of Canadian brewer Molson and the US company Adolph Coors. Until comparatively recently, the latter was merely America's #3 brewer, with virtually no profile outside its domestic market. But in 2001 the company was catapulted into the international big league following its surprise acquisition of the UK's Carling and other beer brands hived out of the former Bass portfolio. Having become the UK's #2 brewer almost overnight, the group went on to negotiate a merger with Molson which bolted on a leading position in Canada. Another significant development came in 2007 with Molson Coors' agreement to combine its US operations with those of rival SABMiller to create MillerCoors, a stronger competitor to local giant Anheuser-Busch. In the wake of AB InBev's break-up bid for SABMiller, Molson Coors took back full control of MillerCoors in Oct 2016. The group's main focus remains on those two markets of North America and the UK, although it also exports to other territories, and established a presence in Eastern Europe in 2012 with the purchase of StarBev.

Advertising

Who handles Molson Coors' advertising? Click here for a listing of Agency Account Assignments. Including unmeasured media, the group declared total advertising expenses of $644m in 2016.

Competitors

See Wine Beer & Spirits Sector index for other companies

Brands & Activities

The merger of Adolph Coors and Molson was completed in February 2005. Towards the end of 2007, Molson Coors and SABMiller agreed to merge their respective US operations in new joint venture MillerCoors. That deal received regulatory approval in June 2008, and the company launched at the beginning of July. SABMiller ended up with a 58% economic interest in the US business; Molson Coors had the remaining 42%. However the two owners had equal voting rights and an equal number of seats on the board. Towards the end of 2015, following AB InBev's deal to acquire SABMiller, a side arrangement was made whereby Molson Coors would acquire SABMiller's economic interest in MillerCoors for $12bn. That reacquisition was itself completed in Oct 2016, giving MolsonCoors full control of MillerCoors.

For 2018, total combined volumes for Molson Coors slipped 3% to 96.6m hectolitres. That included a small amount of contract brewing for third-party customers. Branded volumes were 92.1m hl, down 2%. The group's four global priority brands are Coors Light, Miller MGD, Staropramen and Blue Moon.

Canada

Molson Coors' other North American operating unit is Molson, one of Canada's two leading brewers by volume, sitting neck and neck with Labatt, owned by Anheuser-Busch InBev. First brewed by English immigrant John Molson in 1786 in Montreal, Molson is one of Canada's oldest consumer brand names as well as North America's oldest surviving beer. The company markets a variety of different brews under the main Molson umbrella, including lead brand Molson Canadian, Molson Export, Molson Dry and premium 2012 launch Molson M, among others. There are also specialist and craft beers including Pilsner, Rickard's, Creemore Springs and Granville Island as well US beer Keystone Light. However its top-selling brand is Coors Light, which overtook Budweiser for the first time in 2010 to become Canada's top-selling beer. It slipped back into second place in 2014, but still accounts for almost a third of Molson Coors' total Canadian volumes. Molson Canadian is the #4 brand in the country. The group launched high-strength Coors Altitude exclusively for Canada in 2015. Licensed brands in Canada include Heineken and its subsidiary brands including Moretti, Amstel, Desperados and Dos Equis. A joint venture was formed in 2008 with Grupo Modelo to manage Canadian distribution of Corona and other Mexican beers, previously handled under license. As a result of the purchase by Modelo by AB InBev, that agreement too was later cancelled.

In early 2011, Molson scored a significant victory over Labatt by securing a seven-year sponsorship of the National Hockey League, a longtime partner of the rival brewer, in both Canada and the US. Molson was set to take over from the 2011/12 season, paying what was rumoured to be a record US$375m for the honour. That deal was challenged in court in 2011, and an appeal judge restored the sponsorship to Labatt. Following a further appeal, that decision was itself overturned in October 2011, and Molson given the green light to proceed. However the subsequent NHL lock-out, prompted by a dispute between team owners and players, caused a dent in performance at the end of 2012.

In another surprise development that created a cloud over the main MillerCoors partnership in the US, SABMiller in Feb 2013 gave notice that it wished to terminate Molson Coors' rights to distribute the Miller beer family in Canada, on grounds that it had failed to achieve sales targets. Miller felt it could achieve better results from managing its own distribution. Far from agreeing amicably with its partner's demands, Molson filed a lawsuit to prevent the change. It was unsuccessful, and SABMiller took back distribution of its own brands in Canada in 2015. The subsequent break-up of SABMiller just over a year later handed the Miller brands back to Molson Coors at the end of 2016.

In 2018, Molson Coors had around 32% share of the Canadian beer market to AB InBev/Labatt's 42%. Combined net revenues were $1.39bn, on volumes of 8.55m hl. The business reported pretax income of $157m.

Europe

Molson Coors UK (known as Coors Brewers until 2009) is the #2 brewer in Britain (behind Heineken) with around 18% market share. Its Carling brand has been the country's best-selling lager by volume since 1971, and in 2004 became the first UK beer to sell more than 5m barrels in a year. The majority of sales are in pubs and bars, but it also sells another £314m annually in value in the take-home sector (IRI, ye Mar 2017, The Grocer). A new Carling cider variant launched in 2013 to head off competition from Stella Artois and others. Other variants include Carling Fruit Coolers and Carling Zest. However 2011 premium variant launch Carling Chrome was terminated after a year. Molson Coors lost its rights to Mexican beers Sol and Dos Equis in 2010 following their acquisition by Heineken. It took over Corona from the beginning of 2011, but surrendered these rights too at the end of 2014. Local #2 seller is now Coors Light, sales of which have soared since 2012 as a result of the marketing campaign featuring Jean-Claude van Damme. It contributed £88m in ye 2017.

In 2009, the UK group rescued independent Indian-style Cobra Beer from administration by forming a joint venture with the beer's founder Lord Bilimoria to acquire the business. Cobra has traditionally positioned itself as the best type of beer to eat with Indian food because it is less gassy than most other lagers. Molson Coors paid around £14m for a 50.1% stake. Although the largest share of sales are through restaurants, off-trade sales were £37m in the year to Apr 2016, making it Molson Coors UK's take-home #3. In 2015, the group acquired UK rights to fast-growing Swedish cider Rekorderlig (sales of £38m ye 2017). That was followed in 2016 by local rights to Dutch beer Bavaria.

These are supported by a portfolio that also includes Worthington, Caffrey's, Stones Bitter and the UK license for Grolsch. Molson Coors also distributes Magners cider under contract for its owners C&C. The company has a strong position in Flavoured Alcoholic Beverages (FABs) including Reef and Screamers, introduced in 2002. Hooch, the first FAB when it launched in 1995, was discontinued in 2003. In early 2011, Molson Coors UK acquired Cornish brewery Sharp's for £20m. That company is best-known for fast-growing ale Doom Bar. Molson Coors UK launched new "women's lager" Animee in 2011 as well as premium Carling variant Carling Chrome. Animee was discontinued after a year.

The group added premium cider brand Aspall to its UK portfolio at the beginning of 2018.

Molson Coors established a presence in Central & Eastern Europe in 2012 with a deal to acquire StarBev for $3.5bn. That business was originally created in 2009 from the sale by AB InBev of several breweries which it owned in the region, primarily to pay down debts generated by the takeover of Anheuser-Busch. These assets were acquired by investment fund CVC and merged as StarBev. The key brand in the portfolio is Staropramen of the Czech Republic, also sold in 30 other countries, supported by Ozujsko of Croatia, Hungary's Borsodi and several other beers from Serbia, Romania and Bulgaria.

Combined sales in the UK & Europe were $2.0bn in 2018, with pretax income of $186m. Volumes were 23.8m hl.

International

Until recently, a fourth pillar was supplied by Cervejarias Kaiser of Brazil. Molson took its first steps into Latin America in 2000 when it acquired Brazilian brewer Bavaria from Ambev. It strengthened its position two years later with the acquisition of Kaiser, and the two businesses were merged, with support from minority shareholder Heineken. Following a strategic alliance with Latin America brewer FEMSA to market Coors Light under license in Mexico, Molson Coors agreed in 2006 to sell a 68% shareholding in Kaiser to its new partner. It sold its remaining 15% stake at the end of the year. Heineken eventually acquired full control of both FEMSA and Kaiser in 2010. Molson Coors only presence in Latin America now is through distribution agreements with local partners.

Molson Coors continues to have a comparatively small presence in the Asia market, primarily Japan and China, where the group has a local joint venture with Si'Hai Brewing Company. Coors Light, Blue Moon and Zima are brewed locally under contract. The group controls one brewery in India, producing local supply of Cobra Beer, and distributes Coors and Carling in parts of China. It also exports to popular British tourist destinations in Europe. That business is overseen by the UK management team. In 2010, Mahou San Miguel acquired the license to produce Carling in Spain, and Coors Light was introduced in Russia and Vietnam.

Financials

Molson Coors' net revenues after excise for 2014, excluding MillerCoors, slipped 1% to $4.15bn as a result of currency fluctuation. Net income also declined, falling 9% to $514m as a result of impairment charges against brand values in Europe.

Further currency headwinds, but also declining volumes, reduced net revenues for 2015 to $3.57bn. There was a 2% decrease at constant rates as well. Net income fell 30% to $360m. Group volumes excluding MillerCoors slipped marginally to 31.9m hectolitres. The total including a share of MillerCoors was 58.1m hectolitres, also down slightly.

Net revenues for 2016, with a small end of year contribution from MillerCoors post-acquisition, were $4.89bn. Reported revenues for 2016, including a proportional full-year share of MillerCoors, were $6.8bn. On a proforma basis including 100% of MillerCoors, the figure would have been $10.98bn. Net income soared to $1.98bn as a result of re-valuation of pre-acquisition MillerCoors. Proforma net income would have been $278m.

Reversals in North America weighed heavily on results for 2018. Net sales slipped back by 2% to $10.8bn, while net income tumbled by 29% to $1.1bn.

The Molson and Coors families stepped down from day-to-day management of the group in 2005. However they share supervisory control of the business, rotating the role of chairman between them. At the time of the initial merger Eric Molson became non-executive chairman, with Peter Coors as vice chairman. At the end of 2008 they swapped roles, with Coors taking over as chairman. Eric Molson was succeeded as vice chairman in May 2009 by Andrew Molson. In 2015, the two families swapped roles once again, with Geoff Molson taking over as chairman, while Peter Coors moved back to vice chairman. Peter J Coors and Andrew Molson also sit on the board.

Background

German-born Adolph Coors arrived in the US in 1868, aged just 21. Orphaned at an early age he had learnt his trade in a Bavarian brewery, before travelling to the US in search of a fresh start. He spent several years working his way across the country in a variety of part-time jobs before settling in Denver, Colorado in 1872. There he became a partner and eventually sole owner of a small bottling plant. He persuaded one of his bigger customers to back him in a new brewery venture, based around a spring just west of Denver in the town of Golden. The Golden Brewery opened its doors in 1873, and Coors was quick to target the growing local market of prospectors and panhandlers. The company was soon thriving, and over the following years, Coors' three sons joined the expanding business. The company also diversified, adding a sideline in fine porcelain.

Prohibition brought fresh challenges in 1916. The family fell back on its porcelain sideline, while the brewery turned its hand to malted milk and other non-alcoholic beverages. Adolph Coors died in 1929, and his son Adolph Jr took over control of the company. Prohibition was finally repealed in 1933 and the brewery returned to its original business, extending its distribution elsewhere into the western United States. Over the next 20 years, production soared from 136,000 barrels to over 1 million. However distribution was limited by the fact that the company used no preservatives in its beer, with the result that the bottles needed to be shipped, sold and consumed within one month. In the 1950s, control of the company passed to the founder's grandson, Adolph Coors III, but in a shocking series of events in 1960, he was murdered in a botched attempted kidnapping.

By the 1970s and despite a growing reputation, Coors remained a regional brand, still available only in 11 states through the western US, although it was the best-selling beer in each of its markets. Bill Coors, another grandson, set about expanding the business further. The company went public in 1975, but sales in its core markets began to suffer as a result of aggressive expansion by Anheuser and Miller. Adding to the company's difficulties, a labour dispute in 1977 led to a ten-year nationwide boycott of Coors products. In 1978 the company introduced Coors Light, one of the first low calorie beers in the US, and gradually extended its distribution. In 1981, Killian's Irish Red joined the portfolio. By 1990, Coors was available throughout the US. However the company struggled to match the efficiencies of its main rivals, hampered by the logistical problems of shipping a short shelf-life product which, unlike Budweiser or Miller, needed to be kept refrigerated at all times.

Under yet another generation of the family, Peter Coors, the company opened a second brewery in Memphis, and initiated limited distribution into the international market. Coors Extra Gold was tested in the UK, under license to Scottish & Newcastle. The company also acquired brewing interests in Spain and South Korea.

In 1992 the company also spun off its porcelain and ceramics business as ACX Technologies (now Graphic Packaging International). Later in the decade, Coors formed a joint venture with Canadian brewer Molson to distribute Coors brands in Canada. The deal was reciprocated at the beginning of 2001, when Coors became exclusive US distributors of Molson beers through a second joint venture. With little chance of toppling its firmly established US competitors from their respective #1 and #2 positions, Coors began looking instead to the international market. At the end of 2001, the company was the surprise victor in the auction of the Bass Brewers portfolio, put up for sale by Interbrew. The group paid $1.7bn to acquire a clutch of beers, including leading UK lager Carling, and four breweries.

Three years later Coors announced plans to merge with Molson to create an even bigger North American brewery giant, more capable of taking on Anheuser-Busch and SABMiller. For a while, however, that deal came close to being derailed by a family row between members of the Molson family. Ian Molson, a distant cousin of Molson's group chairman Eric Molson, said he would make a rival offer for the group, and was later reported to have interested SABMiller in backing his bid. However that alternative offer failed to materialize and the merger with Coors was approved by the latter's shareholders in February 2005.

Last full revision 4th July 2017

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