Moslon and Coors to merge?

[Red Baron 0]

credit: toronto star

 

 

Beer icons hope to brew success

But merger would link fading firms

 

 

 

"Molson built his brewery a little downstream from the town, close beside the river. Archeologists can easily locate the spot, as the brewery is still there." — Stephen Leacock

 

 

It would be nice to think that a combination of Molson Inc. and Adolph Coors Co., whose executives confirmed yesterday that a merger is in the advanced stages, could create the basis for an international brewer at least partly based in Canada.

 

After all, with the conspicuous exception of world No. 2 brewer Anheuser-Busch Cos. Inc. of St. Louis, Mo., today's giant brewers mostly hail from smallish countries. The consolidation that has characterized the industry in recent years has been spearheaded by Belgium's Interbrew SA and the former South African Breweries, now SABMiller PLC after the latter's purchase of the U.S. No. 2 brewer, Miller Brewing Co. Filling out the top ranks of world brewers are Heineken NV of Holland and Denmark's Carlsberg AS.

 

Indeed, the 218-year-old Molson — oldest brewer in North America and no less compelled, one would have thought, to spread its wings globally than Magna International Inc. and the Ontario maker of BlackBerries have done — might well have set the pace of global consolidation. As might its longtime rival, John Labatt Ltd. (swallowed up by Interbrew in the mid-1990s), had not both Canadian icons fallen into the hands of conglomerate managers who diversified unwisely into everything from mortgage financing to hardware retailing rather than focus on building a formidable global beer brand the likes of Heineken.

 

Yesterday's reports of stepped-up merger talks between Molson and its similar-sized Denver cousin do not offer much cause for optimism that a Canadian firm can assert a leadership role on the world stage.

 

A proposed Molson-Coors combo, with sales of about $6 billion (U.S.), would still be overshadowed in the all-important U.S. market by the $14.1-billion (U.S.) Anheuser-Busch, which alone accounts for fully half of U.S. beer volume.

 

The decades-long prowess of A-B in marketing, distribution and new-product development has enabled A-B to see off once powerful rivals such as Schlitz, Pabst, Stroh, Schaeffer, G. Heilemann and dozens of smaller competitors. And A-B is determinedly pushing its two remaining national rivals, Miller and Coors, into obscurity.

 

Neither Molson nor Coors have demonstrated the moxie to take on A-B in its home market. (A-B flagships Bud and Bud Light are brewed in Canada under licence by Interbrew's Labatt arm.)

 

And a Molson-Coors union would be a marriage of two fading firms. Coors' flagship Coors Light has lost share to Bud Light and a revitalized Miller Lite; and Coors has failed to develop its own low-carb brew. Despite average 16 per cent annual revenue gains over the past five years, Coors' U.S. market share has inched up just 0.7 per cent, to a mere 10.8 per cent of the world's most lucrative market.

 

The picture is hardly brighter in the Great White North, where Molson's domestic market share of 45 per cent has been in gradual decline, with more bad news expected when it reports quarterly results July 27.

 

"We are expecting another difficult quarter with continued market share and profit pressure in Brazil and continued market share erosion in Canada amid soft industry trends," UBS Securities Canada said in a recent research report that anticipated a Molson-Coors coupling "may not give either company significant opportunities" either for growth or cost-cutting "synergies."

 

Molson has been down this road before. Its alliance with Australia's Foster Brewing Group was mired in management confusion and was unwound after about a decade. As for Coors, Molson has used that firm to distribute its products in the U.S. since 1998 in a ballyhooed effort to make up for lost ground in the lower 48 while Molson was preoccupied with dumping Beaver Lumber and its other non-beer assets.

 

But in six years, that partnership has so little to show for itself that Molson CEO Dan O'Neill was obliged recently to assert once again that Molson is poised to recommit itself to figuring out how to meaningfully crack the U.S. market for its Golden, Export and other brands.

 

It's almost incidental that a deal might not come off between these two legendary brewers. (Dwight Eisenhower arranged to have the unpasteurized Coors shipped to every offshore summit he attended.) With twice the sales volume as Molson, Coors management would strive to be in the driver's seat, even as Molson argues that their comparable market capitalization argues for an equal sharing of power in the boardroom — a recipe for deadlock.

 

And Coors, a resolutely domestic U.S. firm, might push for a side deal in which Molson's troubled Brazilian brewing operation would be dumped.

 

Given the weak management at both firms, it's tough to see a combination between them as anything other than a prelude to ultimate acquisition of the merged entity by savvier consolidators.

 

Neither of these brewers is blessed with formidable distribution networks abroad or new-product development skills at home. What they have is a portfolio of brands that could usefully fill out the line-up of an Interbrew or SABMiller, neither of which has a commanding presence in the U.S. market.

 

For SABMiller, the addition of Molson-Coors would give it a significant entree to Canada while raising its American market share to just under 30 per cent — enough, perhaps, to give SABMiller a fighting chance against A-B, but not enough to incur the wrath of anti-trust regulators.

 

Thus the end game for a combined Molson-Coors nuptials would be a likely second transaction in which both firms lose their independence.

 

Sentimentalists of a certain age will recall that E.P. Taylor's Canadian Breweries combine, with its stable of Carling, Dow, Black Label and O'Keefe brands, was briefly the world's biggest brewer in the 1950s. Taylor let the firm atrophy, however, as he turned his attention to Queen's Plate-winning thoroughbreds, and his shrunken Carling O'Keefe Breweries was later absorbed by Molson.

 

In today's unsentimental world of consolidators, there is room only for global brands like Bud, Heineken, Carlsberg and Fosters;popular regional and premium brands like Alexander Keith's and Stella Artois, respectively, are owned by the mega-brewers.

 

Only tiny local microbrews such as Toronto's Mill Street and Steamwhistle fly under the radar. Independent mid-sized brewers are an endangered species. The legacies of John Molson dating from 1786 and Adolph Coors, who set up his first brewery in Golden, Colo. in 1873, have been living on borrowed time.

 

The best hope for the continued vitality of brands like Molson Export and Coors Light is that megabreweries based in Europe will prove more adept and aggressive in promoting some of Canada's best-known consumer-products brands both at home and abroad than the home-grown management has been.

 

 

what pisses me off that if the deal does go through, Molson would end up losing more money than they are actually gaining at first. These two companies allready have an agreement, as Coors brings Molson to the states and vice versa.

 

Especially all these Moslon Canadian commercials that have spawned through the years, being proud being Canadian, would now be pointless.

 

Its going to hurt both companies, I really don't see the point in this agreement, other than being the third large distributor of beer in the world.

[NoCalMike 0]

if this merger goes through, then it would be nice to see the nasty coors beer to be eliminated altogether and just make Molson, but that would never happen

[Dangerous A 0]

What are you talking about NoCal, both beers are awful.

[Highland 0]

I drink Keith's, Fosters and Heineken, so it's no great loss. And the occasional Budwesier.

[NoCalMike 0]

What are you talking about NoCal, both beers are awful.

well it doesn't get much worse then coors(well maybe keystone light), so if I had to pick one it would be Molson. I don't drink either though.....

[NoCalMike 0]

I drink Keith's, Fosters and Heineken, so it's no great loss. And the occasional Budwesier.

I like Guiness, NewCastle, and Dark Heineken. Or the cheaper days, MGD & Sierra Nevada

[Dangerous A 0]

Guiness, Newcastle, Hefweizen and Sam Adams are my regulars.

[Stephen Joseph 0]

Uhh. Well...Can't comment on this one fellows

Damn work!

[Guest Brian]

Where's the love for PBR on the cheap days.

[Dangerous A 0]

Cheap days is me getting a 40 oz. of malt liquor in the form of brands called "Steel Reserve" and "Cammo".

 

Stuff tastes like donkey piss, but gets the job done when you absolutely have to have liquor and have less than $2.00 on you.

[Guest cobainwasmurdered]

Uhh. Well...Can't comment on this one fellows

Damn work!

If you can't comment on it then WHY the hell would you post in the thread??!

 

 

I dislike this news but it's not as big a deal to me as it once was. and MOlson was always a great beer IMO whereas Coors was of teh ass.

[Dangerous A 0]

I'll agree that Molson was way better than Coors, but I wouldn't go out of my way to buy it.

[Guest Agent of Oblivion]

All beer is shit. I hope they go under, or start making something good.

[therealworldschampion 0]

Eh doesn't affect me, as I prefer Heineken and Yuengling

[NoCalMike 0]

Cheap days is me getting a 40 oz. of malt liquor in the form of brands called "Steel Reserve" and "Cammo".

 

Stuff tastes like donkey piss, but gets the job done when you absolutely have to have liquor and have less than $2.00 on you.

Two 40oz's of Mickeys is my friday-afterwork regular purchase. I usually buy various six packs and drink a few with the 40oz, save the rest, and after a week or two, I have an assortment of beer in my mini-fridge for the weekend..

[Dangerous A 0]

Cheap days is me getting a 40 oz. of malt liquor in the form of brands called "Steel Reserve" and "Cammo".

 

Stuff tastes like donkey piss, but gets the job done when you absolutely have to have liquor and have less than $2.00 on you.

Two 40oz's of Mickeys is my friday-afterwork regular purchase. I usually buy various six packs and drink a few with the 40oz, save the rest, and after a week or two, I have an assortment of beer in my mini-fridge for the weekend..

Damn Alcoholic.

[NoCalMike 0]

Cheap days is me getting a 40 oz. of malt liquor in the form of brands called "Steel Reserve" and "Cammo".

 

Stuff tastes like donkey piss, but gets the job done when you absolutely have to have liquor and have less than $2.00 on you.

Two 40oz's of Mickeys is my friday-afterwork regular purchase. I usually buy various six packs and drink a few with the 40oz, save the rest, and after a week or two, I have an assortment of beer in my mini-fridge for the weekend..

Eh, only on the weekends.....

[Guest Sagrada3099]

Most of the time I hit up Guiness, St. Pauli Girl Dark, Leinenkugels ( seriously, finest red on the market today ), Beamish Black, Pilsner Irquell, and Skull-Splitter Ale.

 

If I've got low money, nothing beats a quesidilla and a Corona.

 

If I have absolutely no money on me, Olde English Malt Liquor.

[MrRant 0]

If you need cheap beer...

 

Lucky Beer is the way to go.

[Highland 0]

A nice little parody of a popular Molson ad.

[JangoFett4Hire 0]

Molson Ice is key when it's 15 degrees outside and you intend on getting total shithouse drunk.. other than that though, there's really no use, And I'd sooner

drink my own whizz than Coors anything. I do still have a soft spot for Molson

Ice though, and I haven't had it in a while since I made the turn to total beer snob.

 

anyways, how can this be bad for Molson? It can't be any worse than Killian's "Irish" Red...

[nl5xsk1 0]

Coors is piss-water, and tends to give me the shits the next day. I'd rather drink nothing than drink it. Thus, my visits to Canada will now be Labatt's-centric, rather than Molson-centric. Even though it will (hopefully) still taste like good ol' Molson, I'd rather not support a company that I hate such as Coors.

 

/drinks MGD & High Life more than any other beer.

//drinks Jack or vodka more than beer

[Guest Wildbomb 4:20]

Cheap beer? My TSMers, nothing is cheaper than Natural Ice.

 

I usually will put down Guinness, Sam Adams, and the occasional MGD.

 

Usually, though, I go for rum or Jack.