TAPA Molson Coors Brewing Company

By Tripp Mickle 

Few beer-industry insiders expected the Coors family to be the last American brewing dynasty left in the business after consolidation reduced the industry to a handful of big players.

Other clans bowed out over the decades. The Millers exited their namesake brewery in the 1970s, the Schlitzes in the 1980s, and the Stroh and Busch families in the 1990s and 2000s, respectively.

The Coors empire, by contrast, grew over four decades to 60-plus brands sold in more than 50 countries from two brands sold in 11 states, as Pete Coors, vice chairman of Molson Coors Brewing Co., pursued a series of deals that preserved the independence of the family business.

Now, the Coors family, along with the Molsons of Canada, have taken full control of the U.S.'s second-largest brewer, paying $12 billion for the rest of a joint venture that combined their U.S. operations with those of SABMiller PLC. Paving the way for that deal was Anheuser-Busch InBev NV's acquisition of SABMiller, which closed this month.

Buying out its partner in the U.S. venture isn't a slam dunk for Molson Coors. While the deal is expected to help the Denver-based brewer eliminate more than $250 million a year in costs, it saddles Molson Coors with a declining business as Mexican lagers and craft brews cut into sales of Miller Lite and Coors Light, its best-selling American brands. The company's U.S. beer-sales volume fell 16% to 54.2 million barrels last year from 64.5 million in 2008, according to Beer Marketer's Insights.

In an interview, the 70-year-old Mr. Coors voiced confidence that the brewer's struggles in the U.S. will end now that the U.S. operations are back in his company's hands, and free of the competing priorities of two companies.

Molson Coors aims to improve light beer sales by gunning for rival AB InBev's Bud Light, expanding sales by its stable of craft brewers, including Georgia-based Terrapin Beer Co., and reigniting sales of lower-priced beers like Miller High Life and Hamm's.

"We've put ourselves in position to take advantage of a great opportunity," said Mr. Coors.

Knowing when to make or avoid a deal has helped make the Coors family survive as many brewing families faltered. Mr. Coors said the then Adolph Coors Co. passed on acquiring Stroh Brewery Co. and watched as it struggled with debt before selling its brands to Miller Brewing Co. and Pabst Brewing Co. in 1999.

Coors expanded internationally in 2002 with a successful $1.7 billion acquisition of parts of Britain's Bass Brewers PLC.

Three years later, the Coors and Molson families combined their largely U.S. and Canadian operations to form Molson Coors. In 2008, they merged the U.S. business with SABMiller's, forming a joint venture called MillerCoors LLC to better compete with Anheuser-Busch.

The deal with SABMiller eliminated more than $1 billion in costs, and Molson Coors's profit soared. It negotiated the right to buy back SABMiller's share of the venture after AB InBev agreed to take over the London-based brewer in 2015.

"We are clever like a fox, but sometimes you have to be lucky as well," Mr. Coors said.

Susquehanna Financial Group beer analyst Pablo Zuanic said he thinks the value of the brewer's $12 billion investment in buying the rest of MillerCoors could increase by half in three to four years, which would put it "in a strong position...to negotiate a merger with Heineken [NV], " he said.

Heineken, the world's No. 2 brewer by volume, has a U.S. market share of just 3.9% share, dwarfed by AB InBev's 44% share and Molson Coors's 25% share. Teaming up with Molson Coors could boost the Dutch brewer in the U.S., while giving Molson Coors, which relies on the U.S. for 70% of its revenue, more heft overseas.

Mr. Coors said he expects the beer industry's consolidation to continue, and Molson Coors to be a part of the action. "We haven't stopped doing strategic thinking about what's available globally," he added. But he declined to discuss any potential mergers.

The U.S. business has shown some signs of improvement since Molson Coors announced the MillersCoors takeover last year. Coors Light and Miller Lite delivered flat sales through the first half of 2016. And, in an annual survey this year by Tamarron Consulting, beer wholesalers for the first time named MillerCoors as the nation's best brewer in sales, marketing and leadership.

Still, its net sales declined 1% to $3.94 billion in the first half of the year from $3.98 billion a year earlier.

Molson Coors Chief Executive Mark Hunter said brands like Miller High Life and Keystone Light lacked "care and attention," and that the company will change that with new pricing, ad campaigns and packaging.

"We'll be a bigger business, with more firepower," Mr. Hunter said.

(END) Dow Jones Newswires

October 25, 2016 10:14 ET (14:14 GMT)

Molson Coors Brewing (NYSE:TAPA)
Gráfica de Acción Histórica
De May 2024 a Jun 2024

Molson Coors Brewing (NYSE:TAPA)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024