MOLSON COORS

CANADA STOCK PORTFOLIO AND COMPANY ANALYSIS

AGENDA

I. Company Profile

II. SWOT Analysis

III. Recommendations

IV. Demand

V. Competition

VI. The Broader Environment

COMPANY PROFILE

• In 2005, Molson (since 1786) and Coors (since 1873) merged to create the Molson Coors Brewing Company; in business for 6 years.

• CEO: Dave Perkins

• Molson-Coors Canada employs over 10,000 people

• Breweries are located throughout the country; main office in Toronto

• Offer 13 brands of beer

• 13 people on the BOD; including Peter H. Coors and Andrew T. Molson

• Molson Coors Community Cheer & Ultimate Day

“Beer is our passion, our heritage and our future.”

SWOT ANALYSISStrengths

• They are an innovative company (Molson 67/Cold Certified)

• The company also has licensing agreement for Canadian market with other leading brands, which include: Amstel Light Heineken and Murphy's, Asahi and Asahi Select, Miller Lite, Miller Genuine Draft, Miller Chill, Milwaukee's Best and Milwaukee's Best Dry, Miller, and Foster's.

• Employ/Sponsor

Weaknesses

• They are dependent on raw materials such as aluminum, wheat, barley, and hops (the price of these goods has dramatically increased since 2008)

• Social perception that beer is for middle to lower class members of society

Strengths

-Innovative

-Sponsorships

-Creative

Weaknesses

-Dependant

-Bad perception in society

Opportunities

-Licensing Agreements

-Production of new products

Threats-Competition

-Difficulty to obtain raw materials

- Not healthy

SWOT

SWOT ANALYSISOpportunities

They can produce a line of Organic Beer, Gluten free beer, or move into the higher priced market of beers; Producing liquor or soda can also diversify risk, as sales of beer fluctuate. Create types of beer that may appeal to different groups (E.g. making an Oktoberfest brew) Design new packaging (E.g. different shaped bottles/different labels)

Threats

Competition is a huge threat in the alcoholic beverage market since there are a large variety of companies, thus a large amount of competition. Top competitors include: Ashai, Carlsberg, Kirin, and Tsingtao.

Any significant increase in raw materials prices will negatively affect their margins. Any significant decrease in the ability to obtain their raw materials will also affect their margins.

A negative perception that beer is not as healthy as other alcoholic beverages such as wine. Most beers have a high gluten content which is not appealing to many customers.

Strengths and Weaknesses

Opportunities and Threats

Broader Environment

RECOMMENDATIONS • Continuity

• Innovation (fruit beer/heritage beer)

• Obtain larger market share

THE MARKETPLACE: DEMAND

  YEAR ENDED

2010

% CHANGE

YEAR ENDED

2009

% CHANGE

YEAR ENDED

2008

% CHANGE

YEAR ENDED

2007

% CHANGE

YEAR ENDED

2006

VOLUME IN

HECTOLITERS

(in millions)

18.464 (1.7) 18.779 (46.0) 34.800 (29.0) 49.046 0 49.058

NET SALES (in millions of

$)

3254.4 7.3 3032.4 (36.5) 4774.3 (22.9) 6190.6 5.9 5845.0

End of the 3rd Quarter (2011):• Net sales: $954.4 million, +9.1% • Worldwide beer volume: 13.13

million hectoliters, -0.8% • Net Sales for the first three

quarters increased • Although less beer was sold,

more net sales were generated

ESTIMATE FOR FUTURE

DEMANDAt this point in 2011, we are already a percentage into the year. Based on the year to date results, we can make assumptions on the performance of Molson Coors Corp. for the last quarter of the year.

THE MARKETPLACE: DEMAND

  % CHANGE FROM 2010

YEAR ENDED 2011

% CHANGE FROM 2011

YEAR ENDED 2012

% CHANGE FROM 2012

YEAR ENDED 2013

VOLUME IN HECTOLITERS (in millions of $)

(1.0) 18.279 (2.0) 17.914 1.0 18.093

NET SALES (in millions of $)

9.1 3550.5 8.0 3834.6 6.0 4064.6

• Raw materials used for making beer have had lower crops yields in 2011, and price increases range from 40% to 80% for barley and 20% to 100% for hops.

• The forecasted increase in net sales for 2011 and 2012 is all from price increase, and not as a result of increase in volume sold.

• We forecast that for 2013 net

sales will continue to increase at a rate of 6%, as the price of beer will increase due to higher cost of commodities.

• As a result of high unemployment among core beer consumers, we are forecasting a decrease in hectoliters of product sold in 2011 by 1% and 2% in 2012.

THE MARKETPLACE: DEMANDOPPURTUNITIES FOR GROWTH

“2010 was a year of good progress in building our brands, innovating, reducing costs, strengthening our balance sheet, and generating cash. We introduced new brands and value−enhancing innovations in each of our businesses to drive the top−line, exceeded our cost−reduction targets for the year, and used a portion of our free cash flow to fund our pensions and reduce balance sheet risk.” - Peter Swinburn, President and CEO of Molson-Coors Brewing Company

“…We continued to pursue all three of our growth strategies: maximizing the value of our core markets, expanding our exposure to emerging markets, and taking advantage of smart M&A opportunities. With these growth strategies, profit and cash generation, and our disciplined use of cash, we remain tightly focused on building long-term value for our shareholders." – Peter Swinburn, President and CEO of Molson-Coors Brewing Company

THE MARKETPLACE: COMPETITION

• Molson-Coors along with Anheuser-Busch InBev and Sleeman breweries make up about 90% of the market share in Canada.

• Market analysis

-Anheuser-Busch InBev (44%)

-Molson-Coors (40%)

-Sleeman Breweries (6%)

-Moosehead Breweries (5%)

-Other (5%)

Moosehead Breweries

-The largest independently owned and operated brewery in Canada

-Based out of Saint John, NB. This company is incredibly loyal to the Maritimes.

-Holds 5% of Canada’s Market share.

-Known for its flagship beer Moosehead Lager but also produces several different brands of Moosehead as well as Alpine and several other brands.

-Moosehead also holds production-contracts for several other foreign beers such as Samual Adam’s Boston Lager.

THE MARKETPLACE: COMPETITION Anheuser-busch

- Largest brewing company in the world.

- Brews popular beers such as Budweiser and bud light

- Holds the number 1 market spot in Canada with a 44% market share

- Has 6 different breweries active across Canada and employs 3000 people.

- Stock is currently trading at a value of $56.87 per share. 52 week high is $64.53. 52 week low is $49.05

Sleeman Breweries

-Company owned by Japan’s Sapporo Breweries

-Holds the number 3 market position in Canada

-Brews Sleeman but also holds production contracts for Stroh, Old Milwaukee, Colt 45, Pabst, and Schlitz as well its parent company’s Sapporo- Operates 5 breweries in Canada

THE BROADER ENVIRONMENT

• Economic forces such as interest rates, GDP and unemployment do have an affect on sales.

• As unemployment increases sales decrease. The same can be said about interest rates and GDP

• The Canadian economy is currently coming out of its recession, therefore the economy is strengthening and sales should continue to rise.

SalesUnemploymentGDP (Per Capita)Interest Rates

THE BROADER ENVIRONMENTDomestic Government and Political Forces:

• The Canadian government regulates the alcoholic beverage industry in many ways:

• Advertising• Beverage Contents• Legal Drinking Age• Taxes

Social and Cultural Forces:

• Opposition in history (prohibition)

• Religious/Moral Opposition

• Negative medical affects

• Health and Scientific community pushing to eliminate alcohol

• Microbreweries

THE BROADER ENVIRONMENTTechnological Forces:

• Home brewing• Microcarbonated lager (Molson

M)• Innovative (cold activated cans/

Natural Forces:• Beer is made from natural products

such as water, hops, barley and yeast.

• Any disturbances to these inputs would likely negatively affect the production of Molson-Coors products.

• The prices of these commodities can often be unpredictable.

Demographic Forces:• There are changing tastes among

young and old generations.

• Baby boomers, who make up a large percentage of Molson-Coors’ target market, are beginning to prefer wine and spirits to beer. This is likely due to recent health studies and dietary trends.

• Younger consumers are also beginning to prefer spirits to beer, causing potential problems for growth and establishing a young customer base.

REFERENCES • http://people.forbes.com/profile/peter-

swinburn/54604

• http://www.eluta.ca/top-employer-molson-canada-toronto

• http://people.forbes.com/profile/david-perkins/54609

• http://phx.corporate-ir.net/phoenix.zhtml?c=101929&p=irol-reportsannual

• http://www.wikinvest.com/stock/Molson_Coors_Brewing_Company_(TAP)

• http://moosehead.ca/home/

• http://www.answers.com/topic/sleeman-breweries-ltd#ixzz1efTYAQ2G

• http://phx.corporate-ir.net/phoenix.zhtml?c=101929&p=irolnewsArticle&ID=1624816&highlight

• http://www.tradingeconomics.com/united-states/gdp-growth

• http://www.econ.ucsb.edu/~tedb/Courses/Ec1F07/craftbeer.html

• http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9NDE3NTAxfENoaWxkSUQ9NDMwMTUyfFR5cGU9MQ==&t=1

• http://phx.corporateir.net/External.File?

item=UGFyZW50SUQ9MzczNzQyfENoaWxkSUQ9MzcxNjIyfFR5cGU9MQ==&t=1

• http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MzMwNjE2fENoaWxkSUQ9MzEyNDUwfFR5cGU9MQ==&t=1

• http://www.answers.com/topic/adolph-coors-company

• http://marketsensus.com/molson-coors-brewing-company-tap-financial-and-strategic-swot-analysis-review-2

• http://www.ourcommunitycheer.com/homePage.aspx

• http://www.theglobeandmail.com/globe-investor/news-sources/?date=20110906&archive=cnw&slug=C8696

• http://www.bizjournals.com/denver/print-edition/2011/10/14/molson-coors-growth-pushed-by-joint.html?page=all  

CHEERS!