Molson And Coors Merger Case Study

Throughout most of its history, the Coors Brewing Company (Coors) has been a regionalized brewer within the United States, specializing in high-quality beer through by virtue of its source water selection, stringent production standards, and cold filtered brewing approach. As the company expanded its distribution to new markets within the U.S. in attempt to gain market share, it made a strategic decision to maintain a majority of its brewing operations at its primary production facility in Golden, Colorado. This decision was based upon the desire to preserve its core production strengths through close family control. However, as the company desires to expand its market presence beyond the

Estimates of fixed costs are reasonably straightforward and are given in the case (p.280), a total of $250,000 ($160,000+$90,000).

Mr. Larry Brownlow needs to decide whether or not to apply for the Coors distributorship in southern Delaware.

In conclusion, it is quite clear that the only way these two companies would be successful in a merger, would be through common goals. Apparently, the main goal of the two corporations was employee happiness and a sense of peace. The leaders of the corporations were the ones responsible for the sharp and considerate decisions to create the positive outcome.

The Coors Brewing Company was founded back in 1873 by two German immigrants Adolph Coors and Jacob Schueler. The two combined invested $20,000, $18,000 of which came from Schueler and the other $2,000 from Coors. The location of the brewery was in the mining town of Golden, Colorado. This location was picked because Mr. Coors believed the key ingredient in beer was the water source. The river that flowed through this mining town was perfect for his beer. The two investors worked together for seven years until Coors bought out Schueler and became the sole owner of the brewery in 1880. When prohibition finally hit Colorado in the year 1916, Mr. Coors was forced to find other means of making money. The brewery was converted to produce malted milk which he would then sell to candy companies. Four years after Adolph Coors passing, in 1929, prohibition is ended and his son, Adolph Coors Jr., takes over the family business. The distribution range of the company quickly expands and by 1948, it stretches across 11 states. It would remain this way for almost 30 years before they start to expand to try and reach a nationwide audience. In 2005, now in its fourth generation of Coors family management, the Coors Brewing Company votes to merge with Molson Brewing Company in Canada to form the Molson Coors Brewing Company. Together they are the world’s seventh largest brewer. Two years later

As a business strategy, Molson Coors have achieved their goal to be an international brewing company.

Anheuser Busch made a offer of $107 billion for Miller, which is the most awaited deal and within this deal both of the largest brewing companies will combine and share the profit. Inorder to have approval, Coors Brewing will acquire more than half of Miller’s stake in MillerCoors for over ten billion dollars, which would give them the rights to Coors Light and Blue Moon. Budweiser plans on cutting costs by a little over one billion dollars, a portion will come from the cut of huge office roles. Within the merger nothing has been said whether the companies will keep the Miller name nor will they keep entire staff of Miller.

The Adolph Coors Case Study proved the dedication and self-reliance Coors brings to the beer industry. Having overcome great adversity by surviving the prohibition years, Coors durability and sustainability are also complimentary points on the structure of the company. Coors is a family owned company that had humble beginnings in Colorado and within 100 years grew into a multimillion-dollar company. Coors’ controlled manufacturing process is a sign of their individuality in the beer industry, this was not an unknown fact, however, as they were receiving orders to ship Coors beer all across the nation as of 1972. The case study allowed an internal and external point of view, which was highly beneficial to properly analyze their upcoming problem within the company.

The current vision and value statements for Molson Coors rely on a unproblematic idea—the proposition of commonality. A vision statement is the declaration of a company 's goals which identifies what the company wishes to achieve or accomplish, and it should be a singular, unified, and clearly explained to all employees so that the proper business strategies are developed to reach the goals (Hom, 2013). The company 's vision is deeply rooted in the idea of “Our Brew,” the cultural compass which provides direction, definition and value (Molson Coors, n.d.). This value is seen from the top down. Our CEO Peter Swinburn said, “It is our business to understand how the company affects the environment, and our employees,

Although this merger look like a “win” “win” situation for both Kraft’s and Heinz, I believe that Heinz is a dominant party in this merger. In the surface it look like Kraft got more out of this deal. 1- the new company name is using “Kraft” first follow by “Heinz” coequal to “ KraftHeinz”. Kraft’s shareholders received a one-time cash divident of $16.50 per share. Why was the deal called “coequal”?, there was a need to sweeten the deal by offering kraft’s shareholders this incentive?

The European Commission believed that allowing the merger was in the best interest of both consumers and for the beer market itself. I wholeheartedly disagree with that decision. Consolidating firms only decreases competition. John Colley, associate dean at Warwick Business School agrees, "Generally speaking, as industries consolidate down to fewer players, prices increase because there is less competition… You tend to end up with less choice of products too” (Thomas). There are four major European beer brewers and with this merger two of the largest are now consolidated. The consolidation “significantly increased the number of national markets where the merged entity and the two

Coors is focused on building its market brand and share through high quality inputs and high quality product. It wants to build revenue through a national expansion plan that includes two or three states a year. While Coors shows consistency in their desire for expansion and brand quality through core technologies, branding, internal developments, high-quality ingredients that lead to high quality products, they do have some glaring inconsistencies.

As the world’s largest brewer, AB Inbev has the ability to compete in new and foreign markets as a strong threat. Due to their enormous capital and expansion-based strategy, they can enter any market as a challenger and shutdown competition to become the leading brewer in this market. As an aggregated note we can also see this in domestic or already dominated markets because due to economics of scale they can achieve differentiated products at a low cost.

The brewing industry is interesting to examine due to its relatively unique structure. Up until November 2015, the market was dominated by four main players, known informally as the “Big Four”. AB InBev was the largest, followed by SABMiller, Heineken and Carlsberg. In November 2015, however, ABInBev and SABMiller agreed a formal $107 billion takeover deal, combining the brewers into a company which industry experts claim would control around half of the industry’s profits (Mickle, 2015). As a result of the sheer size and complexity of the merger, it is anticipated that the deal will not be finalised until the second half of 2016 as ABInBev must negotiate with anti-trust regulators around the world with respect to their potential monopolistic position. As the deal is yet to be completed, this report will analyse ABInBev independent of SABMiller.

Strengths:The largest producer; Improved productivity; strategic with foreign producers; Two independent distribution Weaknesses:Low volume of sales of nonbeer products; Antitrust restrictionOpportunities:Positive volume growth of beer sales; New and attractive market Threats:Rising foreign firms’ competition; Tariffs elimination; Rising imported ingredients cost