INDUSTRY AND COMPETITIVE SITUATION

ANALYSIS:BEER INDUSTRY

Team 3Mason MitchellRandy GreinertSarah YelvertonAlec Cooper

The Beginning 3, 000 B.C. -mainly starches and sugars Modern day Iraq 2 Flavors Malt dried over open flame Hydrometer Invention Better quality malt Colonists/Corn

Coors 1880 Adolf Coors Golden, Co Prohibition “Silver Bullet”-Bill Coors

Coors and the rest

Product Life Cycle Intro- uncertainty Growth- intense competition and climb Mature- stagnant Decline Blue Moon, Bud Light Lime- growth

stage (helped super premium segment advance 27.3%)

Imports on the Decline Corona Extra and Heineken biggest

imports Corona Extra down 4.6% Heineken down 5.5% Both account for over half of imports in

United States Our spin: Bud Light Lime has stolen

customers due to growth stage

Modelo Mexican beers dominate import

category (4 of top 6) S&P relates this growth to rise in

Mexican population, especially in CA. Will continue to grow

MicroBrew Also Called Craft Beer Make limited amount of beer out of small

breweries MicroBrew category has grown consecutively

for 25 years Grew 5% in 2008 Limited edition seasonal beers and

differentiation attribute to their success Samuel Adams of Boston Beer Company is

category leader

Market Dominaton Rule of three and four: 78% of US beer

market owned by MillerCoors and Anheuser-Busch

US sales 2008 Anheuser-Busch- 48.6% market share MillerCoors owned 29.4% of the volume

Top 20 Beer Brands US 1) Bud Light 2) Budweiser 3) Coors Light 4) Miller Light 5) Natural Light Only recognizable beer that was non big

two was Pabst Blue Ribbon at 18

Light Beer 51.8% share of beer consumption Increase of 2.2% in 2008 Bud Light is now the leading brand in

the world

S&P on MillerCoors Sold 64.5 million barrels of beer in 2008 Up 0.4% from 2007 Sold 64.3 million barrels in 2007 Up 4.8% from 2006 Own and operate 8 US breweries

Consolidating Global Beer Market US beer companies are trying to establish

presence in potentially lucrative markets in Asia, Eastern Europe, and Latin America.

Doing this through exports, joint ventures with local brewers and distributors, and purchases of equity interests in local brewers.

In 2005, world’s top ten brewers accounted for 61% of international sales volume.

Molson Coors global Acquired Carling from Bass Brewers,

which made them a player in the United Kingdom.

Also export products to Australia, Japan, and Caribbean Islands

Increasing Target Market Age range 21-24 increased in population

for the first time in two decades

Advertising $975 million dollars spent in 2007 Molson Coors spent $151 million dollars SAB-Miller spent $175 million dollars Anheuser-Busch spent $378 million

dollars Mainly target men with commercials on

television during sporting events

Competition Not only from other beers, but wine and

spirits With spirits you can create a variety of

flavors with mixers Expanded spirit marketing Health-Conscious people shifting to

wine and spirits in moderation People are more time efficient than ever

COMPANY ANALYSIS

Overview of the Company:• 2005 Molson and Coors merged to form Molson Coors • Fifth largest brewer in the world• Molson Coors has the 2nd highest sales within the industry behind Anheuser-Busch

Performance Indicators: Following the merger in 2005 Net Income and

operating revenues for Molson Coors increased until 2007

From 2007 to 2008 the company experienced a decrease in net income and operating revenues as a result of a change in economic conditions and the joint venture with Modelo which was not consolidated yet on the financial statementsNet Income Operating Revenues

2008 2007 2006 2005 20040.0

100.0200.0300.0400.0500.0600.0

SAMTAP

2008 2007 2006 2005 20040.0

2,000.0

4,000.0

6,000.0

8,000.0

SAMTAP

The companies current ratio has increased from .08 to 1.1 which shows the firm is becoming more liquid

The return on assets ratio has increased in recent years showing Molson Coors increase in efficiency in generating income from invested capital

Molson Coors earnings per share have varied over recent years due to the 2005 merger and the current recession

SWOT Strengths: - Strong industry position- Portfolio of strong brands- Strong financial performance Weaknesses:- Dependence on few products- Reliance on third party service providers

Opportunities:- Strategic Agreements- Growing Hispanic population in the US- Growing beer consumption in Asia Threats:- Government regulations- Changing consumer preferences- Industry consolidation

Strategy Performance improvement strategy to build

and strengthen capabilities Reduce general and administrative

expenses by business process outsourcing Standardize business processes in finance,

IT services, and HR Strong brand recognition to obtain a

competitive position Increase in advertising and marketing

expenditures

Industry changeRise of wine, spirits, and craft beer

34% wine40%beer22% spirits

In 1995 beer was 46% now 40%

People are becoming more healthconscious

Increase in Mergers and acquisitions

Strong and Weak Companies Anheuser-Bush Molson Coors

Pats Blue RibbonDecreasing market share 2007 5.9% 2008 2.7%Beer ranked 18 out of 20 top beers

Competitive Moves Mergers and Acquisitions

Pats Blue RibbonBoston Beer Company

Add craft brewers to product mix312ESB

Completive success Advertising Product differentiation Synergy and cost reduction

Industry attractiveness $99.3 billion industry Industry growing during recession Over 21 population is growing