strategic-management

228 AMIT J. SHAH
aims to help parents address underage drinking by nurturing strong, healthy kids and by
being the “most valuable players” in their children’s lives. The program was created with a
partnership between the Search Institute, a leading nonprofit organization that studies and
recommends strategies for raising healthy children and adolescents, and with PLAYERS
INC, a subsidiary of the NFL Players Association, which aims to “take the helmets off”
players and present them as community and civic champions. Addressing underage drinking
is a top priority not only for Bill, but also for Coors in general. “Our message to kids is
‘we’ll wait for your business,’” says Bill (www.molsoncoors.com, 2009).
The company’s Coors and Molson Web sites each prompt users to enter their date of
birth to verify they are of legal drinking age if they want access to promotions within the
site. Any advertising content is also screened and steered to the parts of the Web site that
are behind this prompt. Financial and investor-related corporate data is available without
such a prompt at any of the sites.
External Factors
Exhibit 4 compares Molson Coors to the beverage industry. Note how much better the
company is doing on EPS than the industry average.
The Alcohol Beverage Industry
The alcohol beverage market is truly a behemoth in the U.S. economy, contributing more
than $189 billion. The industry employs over 1.7 million people paying almost $55 billion
in wages. The beer industry also contributes more than $36 billion in federal, state, and local
excise, business, and consumption (www.beerinstitute.org). The U.S. brewery industry is
composed of approximately 1,400 breweries with annual revenue of about $18 billion.
Major companies are Anheuser-Busch InBev and MillerCoors. These top two companies
account for 90 percent of revenue. The majority of breweries are small with fewer than five
employees. The majority of brewery products are malt beverages, primarily beer and ale,
packaged in cans, bottles, barrels, or kegs (Hoover’s Industry Overview, 2009).
Another factor is the approximately 3 million children of the baby boomers (babyboomlets)
who began hitting their prime drinking years in 1996. These customers are not
content to stay with the status quo and may bring profound changes to the industry
(Chura, 2002). An array of choices to cater to more niche markets may include sweeter
brews and concoctions that taste different from what their parents drink. However as more
products emerge, the fickleness of customers increases, which detracts from brand
loyalty. In addition, Morgan Stanley found spirits were the most popular drink choice
among 21- to 27-year-olds, the key marketing segment that brewers target. Spirits are perceived
to have a stronger image among twenty somethings, and consistently beat beer on
taste, quality, and sophistication (Arndofer, 2005).
EXHIBIT 4 Molson Coors versus the Beverage Industry (2009)
Molson Coors Beverage Industry
Market Cap $ 8.90B 548.44M
Employees 14,000 775
Qtrly Rev Growth -54.50% 16.10%
Revenue 3.02B 1.46B
Gross Margin 41.99% 45.96%
EBITDA 616.30M 325.90M
Oper Margins 13.96% 14.09%
Net Income 531.90M N/A
EPS $ 2.895 0.13
Note:
B = billion $
M = million $