Coors Brewing Company, Inc.
MBA 4231, Achieving Strategic Advantage II
Daniels College of Business
University of Denver
May 27, 2004
Throughout most of its history, the Coors Brewing Company (Coors) has been a regionalized brewer within the United States, specializing in high-quality beer through by virtue of its source water selection, stringent production standards, and cold filtered brewing approach. As the company expanded its distribution to new markets within the U.S. in attempt to gain market share, it made a strategic decision to maintain a majority of its brewing operations at its primary production facility in Golden, Colorado. This decision was based upon the desire to preserve its core production strengths through close family control. However, as the company desires to expand its market presence beyond the U.S. boarders with a goal of becoming the 5th largest brewer by 2008, its historic approach to management and operations provides a detriment to achieving this objective. As seen by the on-going consolidation of top brewers within the beer industry, the competition is fierce as more brewers are competing within a global market with extended product lines and decreased profit margins. While organic augmentation is the traditional mode of company expansion within Coors, the harsh reality is that the company must seek external-based initiatives (e.g., joint ventures, acquisitions) to gain market share within the low market growth industry. However, several opportunities exist as three core markets are witnessing increased volume consumption: Russia, China, and Latin America/South America. Several of the top breweries have already implemented joint venture and/or acquisition strategies within these regions. Coors has not. As a result of Coors non-calculated acquisition of Carling Brewery in 2002, the company has become cash-limited as a result of incurring debt. Therefore, immediate acquisition within developing markets is not readily attainable. Because Coors cannot afford to defer market penetration, it must enter these markets immediately through a joint venture arrangement. In addition, the company must be willing to sacrifice its traditional, slow-moving family-based management style to effectively compete within the fast-moving beer market. Through the leveraging of its exceptional strategic sourcing program, savvy marketing approach, and distribution logistics systems, Coors should employ these key fundamentals as part of its international strategy to gain a competitive advantage. In parallel with its joint venture arrangements, Coors should continue to pay down debt and prepare for acquisition of an overseas brewer through the added cash infusion (i.e., issuing of stock). A strong, localized brewer should be purchased within a developing market. In addition, an established East Coast-based microbrewer may also be purchased, if feasible, for greater penetration within the U.S. and increased market share. Although these actions may expand the company, it does not provide a guarantee that its goals can be met. Coors does not possess the 3
financial strengths of the larger competitors, and it trying to join an international expansion race in which it has been a slow-mover. Due to the added requirements of dramatic cultural changes within an embedded organization, the challenge remains great.
II. Core Problem/Issue
Adolph Coors founded the Coors Brewing Company in Golden, Colorado because of the high quality of water that could be found at that location – something he considered the most essential component of brewing a quality beer. Since inception, Coors has continued to evolve and adapt to its environment. During prohibition, Coors malted non-alcoholic beverages to keep the facility running and the employees working. At the end of prohibition, Coors continued to expand through technology progression to allow cold product delivery, which is essential to the...