Adolph Coors Strategy for success in the mid 1970’s
As per our understanding the strategy to Coors success can be attributed to the following Managing Production Cost
Various Cost Control Strategies were
Single product Focus – only one kind of beer
High capacity utilization
(The idea is that doubling the brewery scale will cut the unit capital cost by 25%) •
Produced own malt. Set up rice-processing plant to avoid price fluctuations of “brewing” rice. •
High Vertical Integration
Backward integration by making its own aluminum cans.
Forward integration by making most of its labels and secondary packaging. •
Equipment set ups for 90 % of brewing and 75% of packaging capacity. Location Advantage
Coors being located in Colorado served 11 western states (from California to Texas). They found a great opportunity since demand was 24 million barrels whereas supply was only 17 million barrels. 7 of 24 million barrels sold in the region had to be imported from outside and Coors was more central to that area than the three other facilities of the competitors in Missouri, Texas & Wisconsin. Product Differentiation
Materials - Coors developed their product by using superior agricultural ingredients, pure Rocky Mountains spring water and minimal additives. Processes – They adopted a natural fermentation process, 70 days of ageing versus 20-30 days. Refrained from pasteurization whose intense heat harms the beer. “Freshness Policy” - Refrigerated shipping to avoid spoilage. Wholesalers were required to keep it chilled and stock exceeding 60 days shelf life was to be destroyed (at wholesaler’s expense.) Low Marketing Cost
Coors traditionally relied on its beer to market itself by virtue of its “drinkability”, mainly due to its choice of ingredients, Rocky Mountains spring water and its unique brewing process. Focus was on core competencies in processing that would differentiate it from other makers. Operating performance change w.r.t competitors - 1970...
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