Jarryd Phillips, Jermaine West, Spencer Jacoby, Othniel Hyliger, Steven Pelletier

1
Molson Coors Brewing Company Strategic Analysis
2009
Jarryd Phillips, Jermaine West, Spencer Jacoby,
Othniel Hyliger, Steven Pelletier
2
Overview

• History
• How Molson Coors came to be
• Current Vision Mission Statements
• Proposed Vision Mission Statements
• External Assessment
• Positioning Map
• CPM Matrix
• Opportunities Threats
• EFE Matrix
• International Presence
• Internal Assessment
• Organizational Chart
• 2009 Income Statement
• 2009 Balance Sheet
• Current Financial Ratios
• Financial Trends
• Strength Weaknesses
• IFE Matrix

Strategic Assessment SWOT Matrix Space
Matrix Grand Strategy Matrix BCG Matrix IE
Matrix Matrix Analysis QSPM
Recommendations Craft Beer Analysis
Objectives Strategic Implementation Projected
Income Statement Projected Balance Sheet
Projected Financial Ratios Evaluation Balanced
Scorecard Sources Questions
3
History
1786- John Molson opens a brewery in Montreal,
Canada.
Adolph Coors opens the Golden Brewery in Golden,
Colorado.
1916- Prohibition is enacted in the US. Coors
keeps the brewery open by making malted milk,
near beer and porcelain products.
1959- Coors introduces aluminum cans and cold
filter brewing.
4
How Molson Coors Came to be
William Worthington- 1744
Bass Brewers- 1926
William Bass-1777
Coors Brewers Ltd-2002
Adolf Coors-1873
Molson Coors-2005
Thomas Carling- 1840
Molson Brewers Canada-1989
John Molson-1786
5
Current Vision Statement

• Our ambition is to be a top global brewer. We
  have four strategic goals to help us get there a
  net profit goal, increasing returns from our
  strategic brands, engagement of our employees,
  and recognition for world-class corporate
  responsibility.

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Current Mission Statement

• At Molson Coors, corporate responsibility is core
  to our overall business strategy. We cannot meet
  our profit target without managing sustainability
  risks and opportunities. We grow our brands
  responsibly, and responsibility performance is
  key to engaging our employees. We come from many
  different backgrounds, so our values help to
  unite us. They guide our decisions and our
  actions through excelling, passion, integrity and
  respect, creativity, and quality.

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Proposed Vision Statement

• At Molson Coors, our goal is to provide consumers
  with products they most prefer and at the same
  time be the leading producer of malt liquor
  products in the world.

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Proposed Mission Statement

• At Molson Coors, we desire to produce the best
  products and services for consumers in the world
  market (1, 2, and 3). In the process, our
  employees and managers will utilize the newest
  technology and innovation to ensure profits for
  shareholders and growth for the company (4, 5).
  Our breweries and production processes will
  operate with a concern for employee livelihood
  sustainability, environmental protection, and
  community commitment (8, 9). We will continue
  to provide our value chain with the best value
  possible (7). Our philosophy towards innovation
  and product sustainability displays a commitment
  to our company and will ensure progress in the
  industry for the short and long term (6).
  

1. Customers 2. Products or services 3.
Markets 4. Technology. 5. Concern for
survival, growth, and profitability 6.
Philosophy 7. Self-concept 8. Concern for
public image 9. Concern for employees
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External Assessment
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Positioning Map
Global Sales (High)
Volume Produced(High)
Volume Produced(low)
Global Sales (Low)
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CPM Matrix

Critical Success factors Weights Rating Weighted Score Rating Weighted Score Rating Weighted Score
  0.0 to 1.0 1 to 4   1 to 4   1 to 4
Advertising 0.12 4 0.48 4 0.48 4 0.48
Product Quality 0.13 4 0.52 4 0.52 4 0.52
Price Competitiveness 0.10 4 0.40 4 0.4 4 0.40
Management 0.07 3 0.21 3 0.21 4 0.28
Financial Position 0.06 1 0.06 3 0.18 4 0.24
Cutomer Loyalty 0.05 2 0.10 3 0.15 3 0.15
Global Expansion 0.09 3 0.27 2 0.18 2 0.18
Market Share 0.06 2 0.12 3 0.18 4 0.24
Brand 0.09 3 0.27 4 0.36 4 0.36
Joint Ventures 0.10 4 0.40 2 0.20 3 0.30
Employee Benefits 0.07 3 0.21 3 0.21 3 0.21
Product Placement 0.06 3 0.18 4 0.24 3 0.18
             
               
Totals 1.00   3.22   3.31   3.54
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Opportunities

• Producing liquor or soda can also diversify risk,
  as sales of beer fluctuate.
• The Asian beer market provides ample business
  expansion possibilities, because they are a large
  consumer of the product and their populations are
  growing.
• Creating more strategic alliances with other
  companies reduces risk as they move into foreign
  operations
• Provide more environmentally friendly packaging,
  improve pollution prevention goals.
• Continue expanding joint ventures
  internationally.
• They can produce a line of Organic Beer, Gluten
  free beer, or move into the higher priced market
  of beers.

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Threats

1. Top competitors include Anheuser-Busch
   Heineken.
2. Any significant increase in raw materials prices
   will negatively affect their margins.
3. Any significant decrease in the ability to obtain
   their raw materials will also affect their
   margins.
4. Perceptions that beer is not as healthy as other
   alcoholic beverages like wine.
5. Economic recession in the US increases the sales
   of beer at first, but as the recession continues
   over a longer period of time, it may cause sales
   to decrease.

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EFE Matrix
15
International Presence
16
Internal Assessment
17
Organizational Chart
18
2009 Income Statement
19
2009 Balance Sheet
20
Current Financial Ratios
21
Financial Trends
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Strengths

1. Molson-Coors benefits from their large market
   share in the beer industry in North America.
2. Molson Coors is an innovative company, first by
   surviving prohibition in the US, when their
   product was deemed illegal they began to bottle
   water to keep the company going. When prohibition
   was repealed, they returned to bottling alcoholic
   products and developed the first aluminum can.
3. Strong Financial position.
4. Alliances with NFL and NASCAR.
5. Successful joint ventures.
6. Reasonable prices- can sell to a larger majority,
   although not considered cheap for everyone.
7. Growth in Foreign markets.
8. Molson Coors has a strong brand portfolio
   representing nearly all types of beers which
   should help them diversify risk against changes
   in consumer preferences.

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Weaknesses

• Lower market share in the U.K
• They rely on only a few popular brand names,
  which expose the company to vulnerability when
  sales and economic regions fluctuate.
• Labor practices in Europe.
• They have dependencies on raw materials such as
  aluminum, barley, hops and wheat, and the price
  for these have increased greatly since 2008.
• Perceptions in the states are that it is a middle
  class beer, which makes it harder to sell to the
  people with disposable income
• They rely considerably on a small number of
  suppliers to obtain their packaging.
• Molson-Coors relies on 70 of its U.S. sales from
  Coors Light.

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IFE Matrix
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Strategic Assessment
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SWOT Matrix

• Strengths
• Molson-Coors benefits from their large market
  share in the beer industry in North America.
• Molson Coors is an innovative company, first by
  surviving prohibition in the US, when their
  product was deemed illegal they began to bottle
  water to keep the company going.
• Strong Financial Position
• Alliances with NFL and NASCAR
• Successful joint ventures
• Growth in foreign markets
• Strong brand image

• Weaknesses
• Lower market share in the U.K
• They rely on only a few popular brand names,
  which expose the company to vulnerability when
  sales and economic regions fluctuate.
• They have dependencies on raw materials.
• Dont appeal to class of people with a lower-
  disposable income.
• They rely considerably on a small number of
  suppliers to obtain their packaging.
• Molson-Coors relies on 70 of its U.S. sales from
  Coors Light.

• Opportunities
• Producing liquor or soda can also diversify risk,
  as sales of beer fluctuate.
• The Asian beer market provides ample business
  expansion possibilities, because they are a large
  consumer of the product and their populations are
  growing.
• Creating more strategic alliances with other
  companies reduces risk as they move into foreign
  operations
• Provide more environmentally friendly packaging,
  improve pollution prevention goals.
• Continue expanding joint ventures
  internationally.
• They can produce a line of Organic Beer, Gluten
  free beer, or move into the higher priced market
  of beers.

• SO Strategies
• S1, O3Expand into Asian and European market
  which also encourage them to diversify their
  products. Create alliances with companies in
  other countries.
• S1, O2, O6 Purchase Farms to reduce cost of raw
  materials and use these farms to create a new
  line of organic beer.
• S4, S5, O4 Not only use NASCAR and NFL as sports
  to sponsor, many more sports out there a bigger
  than NASCAR- branch out

• WO Strategies
• W1, O1, O4, Low market share in some countries
  is an opportunity to expand. Should strengthen
  the brand image of weaker product lines in order
  to prevent relying on certain products to boost
  their sales.
• W2, W3, O2 Start utilizing personal resources
  (farms) rather than invest too heavily in
  suppliers.

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SWOT Matrix cont.

• Threats
• Top competitors include Anheuser- Busch
  Heineken
• 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.
• Perceptions that beer is not as healthy as other
  alcoholic beverages like wine.
• Economic recession in the US increases the sales
  of beer at first, but as the recession continues
  over a longer period of time, it may cause sales
  to decrease

• Strengths
• Molson-Coors benefits from their large market
  share in the beer industry in North America.
• Molson Coors is an innovative company, first by
  surviving prohibition in the US, when their
  product was deemed illegal they began to bottle
  water to keep the company going.
• Strong Financial Position
• Alliances with NFL and NASCAR
• Successful joint ventures
• Growth in foreign markets
• Strong brand image

• Weaknesses
• Lower market share in the U.K
• They rely on only a few popular brand names,
  which expose the company to vulnerability when
  sales and economic regions fluctuate.
• They have dependencies on raw materials.
• Dont appeal to class of people with a lower-
  disposable income.
• They rely considerably on a small number of
  suppliers to obtain their packaging.
• Molson-Coors relies on 70 of its U.S. sales from
  Coors Light.

• ST Strategies
• S1, S4, O1 Use market share and alliances in
  North America to promote company. NASCAR and NFL
  are only big in the US, not other markets, so
  have to be smart in how they promote and market
  their products, but can use those sports to their
  advantage!
• S5,S6, O5 Expanding into other markets along
  with diversification of their brand, will help
  reduce the risk of sales in challenging financial
  times in the US.
• S1, S7, O4 Use companys strong financial
  position, along with strong market share
  percentage and alliances to create a stronger/
  potentially healthier brand image.

• WT Strategies
• W1, T5 Molsons low market share in other
  markets will suffer as a result of a recession.
  Expand into foreign markets!
• W3, W5, O3 Dependency on suppliers, will be
  influenced even more if there are any changes in
  raw material prices or during recession periods.

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Space Matrix
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Grand Strategy Matrix
-Market Development -Market Penetration -Product
Development -Forward Integration -Backward
Integration -Horizontal Integration -Related
Diversification
30
BCG Matrix
31
IE Matrix
32
Matrix Analysis
33
QSPM
34
Recommendations

• Invest to develop and start-up a Molson Coors
  Craft/Organic beer line that will result in a
  revenue increase of 10
• Increase advertisement and RD to coincide with
  new beer line
• Utilize Green initiatives for the new line
• Possible expansion in farming industries to
  reduce the cost of raw materials
• Expansion of product brands to avoid relying on
  certain products to boost sales

Total Cost 50,000,000
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Craft Beer Market
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Craft Beer Analysis

• They managed to be successful, amidst economic
  conditions that adversely affected the beer
  industry.
• Craft brewer retail dollar value in 2009 was an
  estimated 6.86 billion, up from 6.32 billion in
  2008.
• 1,585 breweries operated for some or all of 2009,
  the highest total since before Prohibition
• recorded a 10.3 percent increase in sales by
  dollars and a 7.2 percent increase of sales by
  volume in 2009
• Craft breweries also gained a little more market
  share to 6.9 percent in dollar sales and 4.3
  percent in volume

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Objectives

• To be the number one global beer producer
• Market growth in Asian and other international
  markets
• Innovation investments
• Drive value and volume in premium low calorie
  light products
• Strong net revenue management
• Continue to be socially responsible
• Continued joint ventures and alliances
• Brand portfolio development
• Optimize price/volume balance lower COGS
• Increase dividends to shareholders

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Strategic Implementation
39
Projected Income Statement
40
Projected Balance Sheet
41
Projected Financial Ratios
42
Evaluation
43
Balanced Scorecard
44
Balanced Scorecard cont.
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Sources

• Business Sources Complete
• Business and Company Resource center
• http//www.scribd.com/doc/48852989/Report-on-Craft
  -Beer-Industry
• http//billybrew.com/craft-beer-101
• http//www.scribd.com/doc/48852989/Report-on-Craft
  -Beer-Industry
• http//www.craftbeer.com/pages/beerology/why-craft
  -beer/show?titlewhy-do-you-love-craft-beer
• http//www.dailycamera.com/ci_14642832
• http//beerpulse.com/2010/03/craft-beer-sales-up-7
  -2-in-2009-and-projecting-ahead-to-2010/
• http//www.testosteronepit.com/home/2012/3/28/the-
  beer-war-on-american-soil.html
• http//molsoncoors.com/en/Index.aspx
• http//www.thebeerfathers.com/top-us-beer-brand-st
  ats-2009-update/
• http//investing.businessweek.com/research/stocks/
  financials/financials.asp?tickerTAPUS
• http//ycharts.com/companies/TAPA/epsseriestype
  company,idTAPA,calceps,,idTAP,typecompany,calc
  epszoomstartDate12/31/2008endDate12/31/2009
  formatrealrecessionsfalse
• www.yahoofinance.com
• http//investing.money.msn.com/investments/financi
  al-statements?symboltap
• http//www.google.com/url?satrctjqesrcssou
  rcewebcd1ved0CCMQFjAAurlhttp3A2F2Fphx.co
  rporate-ir.net2FExternal.File3Fitem3DUGFyZW50SU
  Q9MzQ4ODh8Q2hpbGRJRD0tMXxUeXBlPTM3D26t3D1ei29
  eST7fXNsfz6QGe2ficBAusgAFQjCNHSn8blXTvd2F7aESbu7
  Vp56c3kKwsig2rEpO5LXJ4U0CdZGiWvPSdA
• http//uk.reuters.com/article/2010/02/08/uk-beer-i
  dUKTRE6173IZ20100208
• http//www.google.com/url?satrctjqesrcssou
  rcewebcd1ved0CCMQFjAAurlhttp3A2F2Fphx.co
  rporate-ir.net2FExternal.File3Fitem3DUGFyZW50SU
  Q9MzQ4ODh8Q2hpbGRJRD0tMXxUeXBlPTM3D26t3D1ei29
  eST7fXNsfz6QGe2ficBAusgAFQjCNHSn8blXTvd2F7aESbu7
  Vp56c3kKwsig2rEpO5LXJ4U0CdZGiWvPSdA

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