Why did the US brewing industry consolidate?
* 700 brewers had opened by 1934. A third of them went out of business before WWII. * After the war consolidation continued – 6 major brewers accounted for all domestic supply. * Several hundred imported brands accounted for only 4% of domestic consumption. Coors was quite successful through the mid-1970s. What was its strategy historically? * Geographic focus, low-cost production, differentiated product, and market power over their distribution. By managing these, Coors achieved 21.2% market share, with the lowest amount spent on advertising. * Low cost of $29 per barrel however they could charge a premium over most of its competitors. Highest profit margins, nearly twice that of their nearest competitor. * Single production facility in Colorado served 11 western states stretching from California to Texas. Shipping costs were twice the industry’s average shipping costs. Made up by the scale of their plant. * Differentiation – pure Rocky Mountain Spring water, expensive raw materials, natural fermentation 70 days of aging versus 20 days * Country’s largest brewery, single product focus, industry’s fastest packaging line * Coors managed their distribution channel very closely. Distributors had very little power negotiating with Coors. How did Coors’ performance change relative to its competitors in the period from 1977 to 1985? Why? * Coors lost their cost advantage they had prior to 1977, increased sales volume by much less as compared to the industry, and dramatically increased advertisements not focused on maintaining the pure Rocky mountain image * Higher number of products produced at the same facility , rising shipping costs were absorbed by Coors as median shipping distances almost doubled in 1985 * Advertising cost for Coors skyrocketed during the period, 14M to 165M * Coors management spoilt company image, poor reputation with minorities, union issues Should...
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