Adolph Coors In The Brewing Industry. Some companies, like Coors, reduced these costs by starting can recycling programs to decrease their dependence on new raw materials. Bargaining power of buyers was high as the independent wholesalers who purchased the beer, and sold and delivered to retail accounts earned low profits. The average return on sales for wholesalers had fa. Riley Resnick 3/28/2017 MGMT 4513 Adolph Coors in the Brewing Industry Case Analysis Since its Founding in 1873 by Adolph Coors, the Coors Brewing Company has been an innovator in the brewing industry for more than 100 years.
|Founded||1873, 146 years ago|
and Jacob Schueler
|North America, United Kingdom, Australia and Ireland|
and Peter Swinburn
|Revenue||US$5 billion in sales|
|Parent||Molson Coors Brewing Company|
The Coors Brewing Company is a regional division of the world's third-largestbrewing company, the Molson Coors Brewing Company. Coors operates a brewery in Golden, Colorado, that is the largest single brewery facility in the world.
In 1873, GermanimmigrantsAdolph Coors and Jacob Schueler from Prussia emigrated to the United States and established a brewery in Golden, Colorado, after buying a recipe for a Pilsner-style beer from a Czech immigrant William Silhan.
Coors invested $2,000 in the operation, and Schueler invested $6,000.
In 1880, Coors bought out his partner and became sole owner of the brewery.
The Coors Brewing Company managed to survive Prohibition relatively intact. Years before the Volstead Act went into effect nationwide, Adolph Coors with sons Adolph Jr., Grover, and Herman established the Adolph Coors Brewing and Manufacturing Company, which included Herold Porcelain and other ventures. The brewery itself was converted into a malted milk and near beer production facility. Coors sold much of the malted milk to the Mars candy company for the production of sweets. Manna, the company's non-alcoholic beer replacement, was a near beer similar to current non-alcoholic beverages. However, Coors and his sons relied heavily on the porcelain company as well as a cement and real estate company to keep the Coors Brewing Company afloat. By 1933, after the end of Prohibition, the Coors brewery was one of only a handful of breweries that had survived.
All of the non-brewery assets of the Adolph Coors Company were spun off between 1989 and 1992. The descendant of the original Herold Porcelain ceramics business continues to operate as CoorsTek.
For much of its first century of existence, Coors beer was marketed solely in the American West. While California and Texas were part of the 11-state distribution area, Washington and Montana were not added until 1976 (Oregon did not approve sales in grocery stores until 1985). This gave it mystique and made it a novelty, particularly on the East Coast, and visitors returning from the western states often brought back a case. This iconic status was reflected in the 1977 film Smokey and the Bandit, which centered around an illegal shipment of Coors from Texas to Georgia. The company finally established nationwide distribution in the United States in the mid-1980s.
In 1959, Coors became the first American brewer to use an all-aluminum two-piece beverage can. Also in 1959, the company abandoned pasteurization and began to use sterile filtration to stabilize its beer. Coors currently operates the largest aluminum can producing plant in the world, known as the Rocky Mountain Metal Container (RMMC), in Golden. RMMC is a joint venture between Ball Metal and Coors, having been founded in 2003.
In the 1970s, Coors invented the litter-free push tab can, in place of the ring pull-tab. However, consumers disliked the top and it was discontinued soon afterward.
Coors Light was introduced in 1978. The longtime slogan of 'Silver Bullet' to describe it does not describe the beer, but rather the silver-colored can in which the beer is packaged. Coors Light was once produced in 'yellow-bellied' cans like the full-strength Coors, but when the yellow coloring was removed and the can was left mostly silver, many dubbed the beer the 'Silver Bullet'.
In 2005, Coors was rated the third largest producer of beer in the United States, and the second largest brewer in the United Kingdom through its subsidiary, Coors Brewers Limited.
On July 22, 2004, the company announced it would be merging with Canadian brewer Molson. The merger was completed February 9, 2005, with the merged company being named Molson Coors Brewing Company.
Adolph Coors Foundation
In August 2004, the Coors Brewing Company announced plans to add brewing capacity to the Shenandoah beer packaging facility in Elkton, Virginia, by early 2007. Coors officials stated that this would 'bring brewing capacity much closer to our important East Coast markets and distributors.'
In April 1977, the brewery workers union at Coors, representing 1,472 employees, went on strike. The brewery kept operating with supervisors and 250 to 300 union members, including one member of the union executive board who ignored the strike. Soon after, Coors announced that it would hire replacements for the striking workers. About 700 workers quit the picket line to go back to work, and Coors replaced the remaining 500 workers, keeping the beer production process uninterrupted. In December 1978, the workers at Coors voted by greater than a two-to-one ratio to decertify the union, ending 44 years of union representation at Coors. Because the strike was by then more than a year old, striking workers could not vote in the election.
Labor unions organized a boycott to punish Coors for its labor practices. One tactic employed by the unions was a push for states to pass laws banning the sale of unpasteurized canned and bottled beer. Because Coors was the only major brewer at the time not pasteurizing its canned and bottled beer, such laws would hurt only Coors. Sales of Coors suffered during the decade-long labor union boycott, although Coors stated that declining sales were also due to an industry-wide downturn in beer sales, and to increased competition. To maintain production, Coors expanded its sales area from the 18 western states to which it had marketed for years, to nationwide distribution. This was completed in 1991 with Indiana being the last state for the brand to appear.
The AFL-CIO ended its boycott of Coors in August 1987, after negotiations with Pete Coors, head of brewery operations. The details of the settlement were not divulged, but were said to include an early union representation election in Colorado and use of union workers to build the new Coors brewery in Virginia.
In 1988, the Teamsters Union, which represented brewery workers at the top three US beer makers at the time (Anheuser-Busch, Miller, and Stroh), gained enough signatures to trigger a union representation election inside the Coors company. Coors workers again rejected union representation by more than a two-to-one ratio.
Mexican Americans charged Coors with discriminatory hiring practices following the passage of the Civil Rights Act, and launched a boycott of the company's products beginning in the late 1960s. Labor unions and gay rights activists joined the boycott, which lasted into the 1980s. A federal lawsuit in 1975 by the Equal Employment Opportunity Commission ended in a settlement with Coors agreeing not to discriminate against blacks, Hispanics, and women.
In 1977, Coors was accused of firing gay and lesbian employees. Coors encouraged the organization of its gay and lesbian employees into the Lesbian and Gay Employee Resource (LAGER) in 1993. In May 1995, Coors became the 21st publicly traded corporation in the United States to extend employee benefits to same-sex partners. When company chairman Pete Coors was criticized for the company's gay-friendly policy during his 2004 Republican primary campaign for a United States Senate seat from Colorado, he defended the policy as a basic good business practice.
According to Russ Bellant Coors family members have played a prominent role in American politics and public policy, supporting many conservative causes. Such causes included providing a $250,000 grant in 1973 to found The Heritage Foundation, an influential conservative think tank, and, via its parent company, the right-leaning think tank American Enterprise Institute. Joseph Coors was also known to have supported the Contras' effort in Nicaragua during Reagan's presidency.
Chairman Pete Coors ran unsuccessfully for the United States Senate from Colorado in 2004 on the Republican ticket.
Coors is responsible for over twenty different brands of beer in North America. The most notable of those brands are Coors, Killian's, Caffrey's, and Blue Moon.
Joint venture with SABMiller
On October 9, 2007, SABMiller and Molson Coors Brewing Company announced a joint venture to be known as MillerCoors for their US operations that will market all of their products.
Change of ownership
In September 2015 Anheuser-Busch Inbev announced that it had reached agreement to acquire competitor SABMiller for $107 billion. During the merger discussions between the two companies in 2015, the U.S. Department of Justice (DOJ) had agreed to proposed deal only on the basis that SABMiller 'spins off all its MillerCoors holdings in the U.S. — which include both Miller- and Coors-held brands — along with its Miller brands outside the U.S.' The entire ownership situation was complicated. In the United States, Coors is majority owned by MillerCoors (a subsidiary of SABMiller) and minority owned by Molson Coors, though internationally it is entirely owned by Molson Coors, and Miller is owned by SABMiller.
SABMiller agreed to divest itself of the Miller brands by selling its stake in MillerCoors to Molson Coors. The merger between the two companies closed on October 10, 2016. The spinoff deal was completed on October 11, 2016. As per the agreement with the regulators, SABMiller sold to Molson Coors full ownership of the Miller brand portfolio outside of the U.S. and Puerto Rico for US$12 billion. Molson Coors also retained 'the rights to all of the brands currently in the MillerCoors portfolio for the U.S. and Puerto Rico, including Redd’s and import brands such as Peroni, Grolsch and Pilsner Urquell.' The agreement made Molson Coors the world's third-largest brewer.
In Canada, Molson Coors regained the right to make and market Miller Genuine Draft and Miller Lite.
- Schueler & Coors, Golden Brewery (1873–1880)
- Adolph Coors, Golden Brewery (1880–1913)
- Adolph Coors Co., Golden Brewery (1909–1913)
- Adolph Coors Brewing and Malting Company, Golden Brewery (1913–1915)
- Adolph Coors Company (1933–1989)
- Coors Brewing Company (1989–2008)
- Molson Coors (2005–2008, parent company of CBC)
- MillerCoors (2008 to present, a joint venture)
- Rocky Mountain Metal Container (2003 to present). A joint venture in aluminum can production with Ball Metal and Coors.
- Frits van Paasschen
- Leo Kiely – current CEO of Molson Coors Brewing Company
- Peter Swinburn – current CEO of Coors Brewing Company
Coors sponsored Premiership side Chelsea from 1994 to 1997. The last competitive game that the club wore shirts bearing Coors as sponsors was the 1997 FA Cup Final in which they beat Middlesbrough 2-0 to end their 26-year wait for a major trophy.
Current affiliate Carling was title sponsor of the Premier League from 1993 to 2001 and since 2003 has sponsored the Football League Cup. The two brands are also former sponsors of Rangers and Celtic. The clubs have worn strips with Coors Light logos for exhibitions in North America, while elsewhere the strips promoted Carling, which is not offered in the United States.
Coors is also the official beer sponsor of NASCAR and formerly the NFL until Bud Light replaced it in 2011. In addition to its official NASCAR sponsorship, Coors Light has regularly sponsored cars in the series. They sponsored Melling Racing, Team SABCO, and most recently Chip Ganassi Racing. Drivers to have Coors backing have included Bill Elliott, who won the Winston Million in 1985 and the 1988 Winston Cup Championship, Robby Gordon, Sterling Marlin, Kyle Petty, David Stremme and Regan Smith. Coors is the title sponsor of the pole award in the NASCAR Sprint Cup and Nationwide Series. Coors stopped sponsoring a stock car in 2008.
Coors or Molson are beer sponsors of the NHL's Colorado Avalanche, Detroit Red Wings, Arizona Coyotes, San Jose Sharks and all six Canadian teams. The company owns twenty percent of the Montreal Canadiens with the Molson family owning the other eighty percent having purchased the shares from Colorado's George Gillett in 2009.
Coors is also the official beer of the Professional Rodeo Cowboys Association (PRCA).
Coors currently holds the naming rights to Coors Field in Denver, Colorado, home of the Colorado Rockies baseball team.
The Coors Events Center on the campus of the University of Colorado at Boulder in Boulder, Colorado is named after the company.
The Coors Life Direction Center of Regis University is also named after the company.
Coors has sponsored English rugby league side Workington Town from the 2007 season, as well as British Ice Hockey Team, The Belfast Giants.
Coors was the main sponsor for the Coors Cycling Team (late 1980s to mid-1990s) and the sponsor for US cycling event the Coors Classic, which ran from 1980 to 1988.
Coors is a sponsor of English Rugby Union team Gloucester. Coincidentally, both Coors and Gloucester RFC were founded in 1873. Coors, through product line Worthingtons, brews a special beer 'Kingsholm Ale', which is sold in the stadium. The Worthington logo is featured on the team's jerseys.
- ^ ab'Molson Coors Completes Acquisition of Full Ownership of MillerCoors and Global Miller Brand Portfolio'. Molson Coors. Molson Coors. October 11, 2016. Retrieved January 29, 2017.
Becomes World’s Third Largest Brewer by Enterprise Value and Strengthens Position in Highly Attractive U.S. Beer Market
- ^ abcdGarrett Oliver (September 9, 2011). The Oxford Companion to Beer. Oxford University Press. p. 266. ISBN978-0-19-536713-3.
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- ^'History of CoorsTek'. Archived from the original on August 17, 2009. Retrieved May 19, 2009.Cite uses deprecated parameter
- ^ ab'Brewer plans Spokane plant'. Spokane Daily Chronicle. December 27, 1975. p. 3.
- ^'Coors plans beer sales expansion'. Lawrence Journal-World. Kansas. Associated Press. August 2, 1977. p. 8.
- ^Stahlberg, Mike (December 1, 1978). 'Beer keeps its cool but raises hot issue'. Eugene Register-Guard. Oregon. p. 1B.
- ^Lazurus, George (September 28, 1976). 'Coor's beer adds two more states to market area'. The Blade. Toledo, Ohio. KNS. p. 31.
- ^'Alas, another Coors tale'. Eugene Register-Guard. Oregon. (editorial). October 2, 1984. p. 10A.
- ^'Coors steps up Oregon sales effort'. Ellensburg Daily Record. Washington. UPI. October 5, 1984. p. 9.
- ^Detzel, Tom (April 11, 1985). 'Coors making another try for retail sales in Oregon'. Eugene Register-Guard. Oregon. p. 12D.
- ^'Coors rolls out in Oregon'. Eugene Register-Guard. Oregon. July 23, 1985. p. 5A.
- ^ abcMills, Dennis (August 14, 1975). 'Cold Coors arrives from craggy Rockies'. Bangor Daily News. p. 21.
- ^Greene, Bob (June 22, 1977). 'The strange case of the Coors beer'. Free Lance-Star. Fredericksburg, Virginia. Field Newspaper Syndicate. p. 2.
- ^'Coors has mystique'. Lakeland Ledger. Florida. (New York Times). March 12, 1975. p. 7B.
- ^Gallagher, Jim (April 5, 1988). 'Coors goes after more Pennsylvania beer drinkers'. Pittsburgh Post-Gazette. p. 18.
- ^'Pull-tab cans get heave-ho'. Pittsburgh Press. (Chicago Daily News Service). October 6, 1975. p. 17.
- ^Hayes, Paul G. (October 19, 1977). 'Poptop cans will lose their pull, expert says'. Milwaukee Journal. p. 1.
- ^'Molson Coors brewery closure job losses announced'. BBC News. December 8, 2014. Retrieved September 9, 2015.
- ^'Fact Sheet'. Molson Coors Brewing Company. 2005. Archived from the original on October 27, 2007.
- ^Coors to build brewery at Shenandoah, Modern Brewery Age, August 16, 2004
- ^'Adolph Coors Company (A)'(PDF). Business Case, Tuck School of Business, Dartmouth College. Archived from the original(PDF) on May 27, 2006. Retrieved April 24, 2006.Cite uses deprecated parameter
- ^Dana Parsons, Why did strikers return?, The Denver Post, October 3, 1979, p. 3.
- ^Karen Newman, Coors workers reject union by big margin, Rocky Mountain News (Denver), December 15, 1978, p. 1.
- ^Molly Ivins, 'Union at Coors May Be Broken But It Hasn't Halted Its Boycott'Archived August 6, 2016, at the Wayback Machine, The New York Times, May 28, 1979, p. A7
- ^Coors union backing Calif. beer roadblock, The Denver Post, December 5, 1977.
- ^Bill before Missouri legislature would ban Coors, The Denver Post November 2, 1984.
- ^Bartell Nyberg, 'Coors brewing for long-term survival', The Denver Post, February 22, 1987, p. 1G.
- ^Louisiana Beer Reviews: Coors Banquet Beer Revisited (bottled version)Archived January 4, 2016, at the Wayback Machine
- ^AFL-CIO ends 10-year Coors boycott, The Denver Post, August 19, 1987.
- ^Jeffrey Leib, 'Coors workers reject union', The Denver Post, December 16, 1988, p. 1A.
- ^MacLean, Nancy (2006). Freedom is Not Enough: The Opening of the American Workplace. Harvard University Press. pp. 177–179.
- ^Lichtenstein, Grace (December 28, 1975). 'Is it beer or 'Colorado Kool-Aid'?'. Lakeland Ledger. Florida. (New York Times). p. 7D.
- ^'Adolph Coors Company (A)'(PDF). Business Case, Tuck School of Business, Dartmouth College. Archived from the original(PDF) on May 27, 2006. Retrieved April 24, 2006.Cite uses deprecated parameter
- ^'The Dynamics of Brand Legitimacy: An Interpretive Study in the Gay Men's Community (PDF)'. Journal of Consumer Research, University of Chicago Press. 16: 670–675. JSTOR10.
- ^Justin Berton, The other Coors spokesman, Westword (Denver) September 2, 1999, p. 28.
- ^Michael Booth, 'Coors adds 'partners' to benefits', The Denver Post, July 8, 1995, p. 1A.
- ^John C. Green, Mark J. Rozell, Clyde Wilcox, The Values Campaign?Archived May 2, 2016, at the Wayback Machine Washington, D.C.: Georgetown University Press, p. 185.
- ^Russ Bellant, The Coors Connection: How Coors Family Philanthropy Undermines Democratic Pluralism, Political Research Associates, 1990, p. 21
- ^Coors Brewing Company (MolsonCoors)Archived March 4, 2016, at the Wayback Machine
- ^'Miller, Coors double-team Bud – New venture, to be called MillerCoors, will take on industry-leader Anheuser-Busch, which owns Budweiser'. CNN. October 9, 2007. Archived from the original on November 3, 2007. Retrieved October 9, 2007.Cite uses deprecated parameter
- ^Nurin, Tara (July 20, 2016). 'DOJ Approves Largest Beer Merger In Global History, With Significant Conditions'. Forbes. Forbes. Retrieved January 29, 2017.
- ^Brown, Lisa (October 11, 2016). 'A-B InBev finalizes $100B billion acquisition of SABMiller, creating world's largest beer company'. Chicago Tribune. Chicago. Retrieved January 29, 2017.
- ^Wright, Lisa (November 11, 2015). 'Molson Coors doubles with $12B Miller buyout'. Toronto Star. Toronto. Retrieved January 29, 2017.
- ^'reportonbusiness.com: Coors Light takes over as NASCAR's best bud'. The Globe and Mail. Toronto. Archived from the original on December 22, 2007.Cite uses deprecated parameter
- ^Newton, David (February 24, 2012). 'Next year's Daytona 500 is Feb. 24'. ESPN.com. Retrieved February 24, 2012.
- ^'Article'. canada.com. Archived from the original on September 2, 2009. Retrieved August 17, 2012.Cite uses deprecated parameter
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- ^'Coors may have the best naming rights deal in sports'. Coloradoan. Retrieved April 11, 2019.
- Baum, Dan. Citizen Coors: A Grand Family Saga of Business, Politics, and Beer. New York: HarperCollins, 2000. ISBN0-688-15448-4
- Jett, Philip. The Death of an Heir: Adolph Coors III and the Murder That Rocked an American Brewing Dynasty New York: St. Martin's Press, 2017. ISBN978-1250111807
17735 West 32nd Avenue
Golden, Colorado 80401
Telephone: (303) 279-6565
Fax: (303) 277-6246
Web site: http://www.coors.com
Incorporated: 1913 as Adolph Coors Brewing and Manufacturing Company
Sales: $2.06 billion (1999)
Stock Exchanges:New York
Ticker Symbol: RKY
NAIC: 312120 Breweries; 327213 Glass Container Manufacturing; 332431 Metal Can Manufacturing; 422810 Beer and Ale Wholesalers
Adolph Coors Company is the only family-owned brewery in the United States that was able to survive the late 20th-century consolidation of the American beer industry without relinquishing family control. The regional brewer gained national prominence in the 1960s and 1970s, but only officially achieved national distribution in 1986. Prodded from its conservative management tendencies by stagnant sales and meager profits in the late 1980s, a new generation of Coors family (and nonfamily) leaders sought to revitalize the business in the 1990s. Coors entered the 21st century ranked a distant third to market leaders Anheuser-Busch Companies, Inc. and Miller Brewing Company. Coors operates the world’s largest brewery at its headquarters in Golden, Colorado, and distributes its 13 branded malt beverages in 30 countries worldwide—although 98 percent of revenues are generated in the United States. In addition to its brewing and distribution activities, which are conducted through a subsidiary, Coors Brewing Company, Adolph Coors Company also owns and/or operates aluminum can and glass manufacturing facilities in Colorado.
The Foundation of the Brewery
Adolph Herman Joseph Coors emigrated to the United States from Germany in 1868 at the age of 21. After purchasing a Denver bottling company in 1872, Coors formed a partnership with Jacob Schueler in 1873. Although Schueler invested the lion’s share of the $20,000 necessary to purchase and convert an old tannery in nearby Golden into a brewery, Coors was able to buy out his partner in 1880. His acquisition inaugurated more than a century of Coors family control.
The fledgling brewery’s sales increased steadily in the ensuing decades. In 1887 the brewery sold 7,049 barrels of beer (31 gallons per barrel). Three years later that figure more than doubled, reaching 17,600 barrels. Over the years Adolph Coors slowly expanded his market. By the time he officially incorporated his brewery in 1913 as Adolph Coors Brewing and Manufacturing Company, Coors beer was being distributed throughout Colorado.
Even at this early point in the company’s history, the distinctive Coors philosophy was emerging. The main tenets of this philosophy adhered to by four successive generations of Coors beermakers, each generation further refining the knowledge inherited from the preceding generation, were the following: Adolph Coors believed in sparing no effort or expense in producing the best beer possible. To this end, he believed that only Colorado spring water was good enough for his beer. He also commissioned farmers to grow the barley and hops that he needed for his brewing process. The second tenet of the philosophy was that his family always came first, without exception; the Coors family brewery remained a tight-knit, protective, almost secretive enterprise. The last tenet was that “a good beer sells itself.” Until 1980 Coors spent substantially less on advertising than any other brewer.
Prohibition came early to Colorado. In 1916 the state’s legislature passed a law banning the production and consumption of alcoholic beverages within the state. Obviously, Prohibition was detrimental to Adolph Coors’s brewery; some business historians assert, however, that the legislation strengthened the burgeoning company. The obvious changes in product offer-ings—Coors manufactured “near beer” and malted milk duringthis period—were reflected in a name change, in 1920, to Adolph Coors Company. Adolph Coors and his son, Adolph, Jr., also used the opportunity to diversify their company, creating what was eventually to become a small-scale vertical monopoly: Coors acquired all that it needed to produce its beer, from the oil wells that created the energy necessary to run the brewery to the farms that grew the ingredients, and from the bottling plant that made the containers to the trucks used for distribution. This expansion was financed entirely with family money.
Astounding Post-Prohibition Growth
The repeal of Prohibition in 1933 did not result in as dramatic a sales increase for Coors as it did for many other producers of alcoholic beverages. Instead, the Adolph Coors Company, under the direction of Adolph, Jr., and his two brothers, expanded its market slowly in the 1930s. Their insistence on the use of all natural ingredients and no preservatives—in accordance with the brewery’s founding tenets—made wider distribution prohibitively expensive. The beer had to be brewed, transported, and stored under refrigeration, and its shelf life was limited to one month. But if Coors’s growth and development in the decades following the repeal of Prohibition was less dramatic than that of brewing powerhouses such as Anheuser-Busch and Miller, it was no less amazing. For while other regional breweries were squeezed out of the market—the number of independents shrank from 450 in 1947 to 120 in 1967—Coors grew steadily into one of America’s leading beer brands. Coors’s production increased 20-fold, from 123,000 barrels in 1930 to 3.5 million barrels in 1960, as the brewer expanded its reach into 11 western states. Coors’s ranking among the nation’s beer companies advanced accordingly, from 14th in 1959 to fourth by 1969.
How did Coors grow 1,500 percent between 1947 and 1967, with only one product, made in a single brewery, and sold in only ten states? A quality product was certainly one reason for Coors’s success. The company’s technological innovations, including the development of both the first cold-filtered beer and the first aluminum can in 1959, also placed it in the vanguard of the beer industry. Another reason was a unique marketing ploy that Coors perfected during the 1960s. When Coors entered a new market, it would lead with draft beer only. The company would sell kegs to taverns and bars at a price under that of its lowest competition. Then Coors would encourage the barkeepers to sell the beer at a premium price. Once Coors’s premium image was established, the company would then introduce the beer in retail stores. Since Coors spent so little on advertising, the company was able to offer a better profit margin to its wholesalers. These profit incentives to both wholesalers and retailers worked well. Through the 1970s Coors was the leading beer in nine of the 11 western states in which it was sold. In California, the second largest beer market in the country (New York was first), Coors at one time held an astonishing 43 percent of the market.
1970s Through Mid-1980s: Cult Status, Controversies, and Declining Fortunes
Marketing, innovation, and product quality, however, could not account for what was later considered one of the strangest phenomena in U.S. business history. Beginning in the late 1960s and culminating in the mid-1970s Coors developed, without any effort by the company, an unusual reputation as a “cult” beer. Limited availability created intense demand on the East Coast. Westerners, keen to flaunt their perceived superiority to Easterners, got caught up in a “we have what you want” syndrome and unwittingly became the company’s unpaid advertisers. As a result, Coors virtually eliminated its competition in nine western states. Those nine states provided Coors with all the market it needed to become the fourth largest brewery in the nation.
But all was not well with the company and its enigmatic founding family. The 1960 kidnapping and murder of Adolph III had intensified the clan’s already strong tendency toward secrecy. Their cautious, elusive nature produced circumspect hiring practices, including polygraphs and sworn statements of loyalty. Outsiders saw these practices as both unfair and as a means of enforcing racial discrimination: the limited numbers of African Americans and Hispanics employed by the company seemed to support this view. Lawsuits were filed alleging discrimination and, more important, a coalition of minority and labor groups organized a boycott, which intensified the negative publicity surrounding the company. The boycott and lawsuits provoked more public scrutiny of the Coors dynasty. A series of articles appeared in the Washington Post in May 1975 documenting Joe Coors’s ultraconservative political philosophy. Not only did these revelations exacerbate the boycott, they also influenced the average consumer and generally undermined Coors’s market position.
Coors—it’s a name that conjures up an image of cool mountain streams, clear blue skies and all that is inspiring about the Rocky Mountain West.
It is a name associated with an uncompromising commitment to quality—a reputation that began more than 100 years ago and thrives to this day.
It is the name of an ambitious 19th-century pioneer whose humble dream grew into the world’s largest single-site brewery.
But more than anything else, the name Coors is one held dear in the hearts of beer lovers across the country and, increasingly, around the globe.
At first, the Coors family’s response was retrenchment and litigation. But when sales dropped ten percent in California in 1975 (at the time that state accounted for 49 percent of total sales), the family changed its tactics. They settled the lawsuits, agreed to a minority hiring plan, and launched advertising campaigns aimed at showing the company’s “good side.” Television advertisements showed that minorities were happily employed in the brewery. Bill Coors took the initiative on environmental issues and proclaimed that the company was well ahead of the industry and the government in keeping the environment clean. The replacement of pull-tabs with “pop-down” tabs and the first aluminum recycling program were cited as proof of Coors’s commitment.
After a decrease in sales through the late 1970s, the company appeared to revive in 1980. Sales volume dropped by one million barrels between 1976 and 1978, bottoming out at 12.5 million barrels before rebounding in 1980 to 13.7 million. Bill and Joe Coors, the third generation of the family to take charge, concluded that their sales problem emanated from their image problem and that they had successfully solved both.
Two separate situations, one in 1975 and the other in 1976, should have signaled that the company’s problems went beyond that of image. In 1975 the Coors family was forced for the first time to offer shares to the public to raise $50 million to pay inheritance tax for a family member. The original offering was successful, raising more than $130 million. The stock sold was of a nonvoting class, so the family did not relinquish any control over the company. Analysts suggested, however, that the reluctance with which the company undertook the offering disclosed a disdain for modern methods of capitalization. The second situation involved a Federal Trade Commission ruling, later upheld by the U.S. Supreme Court, striking down Coors’s strong-arm distribution tactics. Coors refused to sell its product to distributors that the company regarded as unable to handle the beer properly. Once again, many industry analysts remarked that the company exhibited a disdain for mass marketing techniques.
Indeed, Coors remained committed to its founder’s decidedly outdated idea that “a good beer sells itself.” In 1975 William Coors claimed, “We don’t need marketing. We know we make the best beer in the world.” Throughout its entire history, Coors had spent far less than its competitors on advertising. In the 1970s, Coors’s ad budget amounted to about $.65 per barrel, compared with the $3.50 per barrel promoting the leading beers. Anheuser-Busch and Miller spent billions of dollars on promotion in a market that they continually expanded with new products. Coors, on the other hand, only reluctantly joined the light beer movement—introducing Coors Light in 1978—and grudgingly increased its meager marketing outlay. As a result, Coors’s 1982 sales volume declined to less than 12 million barrels for the first time in ten years, and the company relinquished its third-place ranking to Stroh Brewing Company. This decline came in spite of the expansion of Coors’s distribution area across the Mississippi for the first time in 1981, when the company began selling its beer in Louisiana, Mississippi, and Tennessee.
Although Coors’s sales increased from $1.1 billion in 1983 to $1.8 billion in 1989, profits declined from $89 million to $13 million, and the company’s return on sales dropped from eight percent to less than one percent. Some observers blamed the brewery’s entrenched family management, which they characterized as reactionary. But larger industrywide trends also contributed to the low earnings. The beer market’s customer base began to stagnate in the mid-1980s, forcing brewers to use margin-lowering tactics to build volume and share. These included brand segmentation, increased advertising, international expansion, and heavy discounting.
- Adolph Herman Joseph Coors forms a partnership with Jacob Schueler to convert a tannery in Golden, Colorado, into a brewery.
- Coors buys out Schueler.
- Company is incorporated as Adolph Coors Brewing and Manufacturing Company.
- Prohibition is enacted into law in Colorado.
- Company changes its name to Adolph Coors Company.
- Prohibition is repealed.
- Company develops the first aluminum can.
- Coors becomes the number four brewer in the United States.
- Company goes public, offering only nonvoting shares.
- Coors Light is introduced.
- Coors’ distribution area expands across the Mississippi for the first time.
- Coors Brewing Company is created as a beer-focused subsidiary of Adolph Coors Company; Peter Coors is named vice-chairman, president, and CEO of Coors Brewing.
- Keystone and Keystone Light brands make their debut.
- A brewery in Memphis, Tennessee, is purchased from Stroh Brewing.
- Coors beer is now available in all 50 states.
- Coors introduces Zima, a clear, foam-free malted brew; the company’s nonbeer assets are spun off to shareholders as ACX Technologies, Inc.
- For the first time, a nonfamily member, W. Leo Kiely, is selected as president of the brewing business.
- The SandLot Brewery opens at Denver’s Coors Field; the Blue Moon specialty brand is launched.
- Coors Non-Alcoholic is introduced.
- Peter Coors is named chairman of Coors Brewing and president and CEO of Adolph Coors Company.
Late 1980s into the 21st Century: Changing Times Under Peter Coors
Under the direction of Peter Coors, the brewery eagerly sought to catch up with its larger rivals. In 1987 Peter Coors, a great-grandson of the founder, was named vice-chairman, president, and CEO of Coors Brewing Company, a new beer-focused subsidiary of Adolph Coors Company (Bill Coors remained chairman of the parent company). The new leader was a driving force behind Coors’s grounds well of change and continued on that course in the late 1980s into the early 1990s. Under his direction, the brewery completely reversed its advertising course: by the early 1990s, Coors began to spend more—in terms of advertising per barrel of beer sold—than its bigger rivals. Coors Light became the company’s best-selling beer, America’s third-ranking light beer, and the number one light beer in Canada. The company embraced the concept of brand segmentation and discounting, introducing the “economy” or “popularly priced” Keystone and Keystone Light in 1989. Ostensibly offering “bottled-beer taste in a can,” these beers boosted sales volume, raising overall Coors sales to ten percent of the beer market and winning back the number three spot. But at the same time, such new products took market share awayfrom other Coors brands, including the family’s original label, which lost one-third of its sales volume from the mid-1980s to the mid-1990s.
While Keystone appealed to the budget-minded beer drinker, other new beverages targeted the higher-margin “specialty” and “boutique” markets. The domestic company craftily entered the fast-growing import market with the introduction of “George Killian’s Irish Red,” a defunct Irish brand licensed by Coors and produced in the United States. Even without the support of television advertising, the faux import was able to compete with the Boston Beer Company, Inc.’s domestically microbrewed Samuel Adams brand for leadership of the specialty beer segment.
In 1992, Coors launched Zima, one of the beer industry’s most creative new beverages. The clear, foam-free malted brew created a whole new beverage category. The drink’s novelty won it instant popularity that fizzled even before Coors could introduce its first derivative, Zima Gold, in 1995. Analysts noted the telling fact that neither Anheuser-Busch nor Miller, both savvy marketers, followed Coors’s lead into the clearmalt category. Zima Gold was pulled from the market after six weeks of disappointing sales.
Peter Coors was not afraid to buck decades of family tradition, chalking up several firsts that had previously been renounced. With Coors running up against its lone brewery’s 20-million-barrel annual capacity, Peter floated the company’s first long-term debt offering in 1990. Later in 1990, he tried to negotiate a $425 million acquisition of Stroh Brewing, but ended up buying its three-million-barrel-capacity Memphis, Tennessee brewery for about $50 million. If, as Peter Coors hinted to a reporter in a March 1991 Forbes article, the company wanted to mount a challenge to second-ranking Miller Brewing, it would still need to double its U.S. brewing capacity. Meanwhile, in 1991, the company’s distribution area covered all 50 states for the first time.
In 1992 Coors spun off the company’s nonbeer assets—including the high-tech ceramics division, as well as the aluminum and packaging businesses—as ACX Technologies, Inc. Coors shareholders received one share of ACX for every three shares of the brewing company. The divestment was considered successful: ACX’s sales increased from $544 million in 1991 to $732 million in 1994, and profits multiplied from $1.3 million to $20 million over the same period.
In 1993, Peter Coors broke with 121 years of history by hiring the first nonfamily member to the presidency of the brewing business. His choice, W. Leo Kiely, reflected Coors’s new emphasis on marketing. Kiely had been a top marketing executive with Frito-Lay Company, a division of PepsiCo, Inc. The new president was given a straightforward, but arduous mandate: increase Coors’s return on investment from less than five percent to ten percent by 1997. A significant cost-cutting move came in the form of a 1993 workforce reduction of 700, which was accompanied by a $70 million charge that led to the company’s first full-year loss in ten years.
With the Zima brand faltering, Coors looked for growth from overseas markets and from a new specialty brewing venture. In 1994 the company purchased the El Aquila brewery in Zaragoza, Spain, to manufacture Coors Gold for the Spanish market and Coors Extra Gold and Coors Light for several markets in Europe. That same year Jinro-Coors brewery in Cheong-Won, South Korea—which was one-third owned by Coors—began operation. Coors’s partner in the venture, Jinro Limited, ran into financial difficulties later in the decade, leading to the sale of the brewery to another company and ending Coors’s involvement. In 1995 Coors entered the microbrewery market with the opening of the SandLot Brewery located at Coors Field in Denver, the home of Major League Baseball’s Colorado Rockies. Specialty beers under the Blue Moon label began to be crafted at this 4,000-barrel-capacity facility. In 1997 the company entered into a partnership with Foster’s Brewing Group Limited of Australia and the Molson Companies Limited of Canada for the distribution of Coors brands in Canada. The following year Molson gained Foster’s stake, giving Molson a 49.9 percent stake and Coors a 50.1 percent stake.
From 1988 to 1997 Coors increased its share of the U.S. market from 8.8 percent to 10.7 percent. Production increased over the same period from 16.5 million barrels to 20.4 million. Coors remained a distant third to Anheuser-Busch and Miller, but it had made strides in improving profitability, in part from an overhaul of what had been a convoluted U.S. distribution system. In 1997 the company reported net income of $82.3 million on sales of $1.82 billion, which translated into a net profit margin of 4.5 percent—a significant increase over the previous year’s figure of 2.5 percent.
By 1999 sales had surpassed the $2 billion mark for the first time, and net income reached $92.3 million. Return on average shareholders’ equity reached 11.4 percent, a vast improvement over the low single-digit figures of the early 1990s. That year Coors sold 23 million barrels of malt beverages. Surprisingly, a comeback by Zima was a driving force behind the improving results. Zima was repositioning as a refreshing alcoholic beverage, and as an alternative to beer—and its taste was altered to make it less sweet and more tangy. Consequently, sales began rising in 1998 and 1999, although they failed to reattain the peak level of 1994. In 1999 Zima Citrus was introduced, offering a blend of natural citrus flavors. Among other late 1990s new product introductions was Coors Non-Alcoholic, a premium brew with less than 0.5 percent alcohol by volume.
In May 2000, on the heels of the record 1999 performance, Peter Coors was named chairman of Coors Brewing Company and president and CEO of Adolph Coors Company, with Bill Coors remaining chairman of the parent company. Kiely was promoted to president and CEO of Coors Brewing. Under the leadership of Peter Coors and Kiely, the company was likely to continue its increasing focus on profitability and growth. With only two percent of revenues being derived outside the United States, the management team was also likely to pursue overseas opportunities in a prudent manner, keeping a keen eye on the earnings potential of such ventures.
Coors Brewing Company; Coors Brewing Company International, Inc.; Coors Brewing Iberica, S.A. (Spain); Coors Distributing Company; Coors Energy Company; Gap Run Pipeline Company; Coors Nova Scotia Co. (Canada); Coors Global, Inc.;Coors Intercontinental, Inc.; The Rocky Mountain Water Company; The Wannamaker Ditch Company; Coors Japan Company, Ltd.; Coors Brewing Company de Mexico, S. de R.L. de C.V.; Coors Brewing International, Ltd. (U.K.); Coors Export Ltd. (Barbados); Coors Canada, Inc.
Anheuser-Busch Companies, Inc.; Bass Brewers; The Boston Beer Company, Inc.; Brauerei Beck & Co.; Canandaigua Brands, Inc.; Carlsberg A/S; Foster’s Brewing Group Limited; The Gambrinus Company; Genesee Corporation; Grupo Modelo, S.A. de C.V.; Guinness Ltd.; Heineken N.V.; Interbrew S.A.; Kirin Brewery Company, Limited; Miller Brewing Company; S&P Company; Scottish & Newcastle plc.
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—April Dougal Gasbarre
—updated by David E. Salamie