Molson Coors Brewing Company | Operations Management | | Busi 2002 | Due Date: October 3, 2012 |

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Table of Contents Introduction 2 Overview of Company 2 Background of Molson Coors Brewing Company 2 Molson Coors Brewing Company Vision Statement and Values 4 Operational Analysis 4 Quality Management 4 Product Design 5 Location 6 Supply Chain Management 6 SWOT Analysis 7 Strengths 7 Weaknesses 9 Opportunities 9 Threats 10 Porters Five Forces 12 Product Life Cycle 13 Cold Activated Bottles and Cans 13 Widemouth Bottles 14 References 15

Introduction Molson Coors Brewing Company is one of the leading manufacturers in the Brewing Industry. They have been in business for over 350 years and have been in a number of different industries. When the Molson Inc. and Coors merged in 2005, they began to focus on one main product, Beer. This report will include a background of Molson Coors Brewing Company, a SWOT analysis, Porters Five Forces and a Life Cycle Product analysis on two of their products.
Overview of Company
Background of Molson Coors Brewing Company
Molson Coors is has been manufacturing beer for more than 350 years. They are currently involved in all aspects of the production process, including; manufacturing, packaging and selling of its malt products. Molson Coors is primarily classified as an American company, after the merger between Molson Inc. and Coors in 2005. Due to the merger, the company maintains two main head offices; their Canadian office is in Montreal, Quebec and their United Stated office in Denver, Colorado. They have several breweries located within Canada, the United Kingdom, Central Europe, Asia and the United States. Molson Coors is also on both the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). According to Yahoo! Finance website, the NYSE Molson Coors stocks (TAP) stocks have fluctuated from $37.96-$46.35 over the past 52 weeks, while the TSX Molson Coors stocks (TPX-B) stocks have been steady between the $44-$45 marks.
Molson Coors Brewing Company is one of the top three brewers within the USA, Canada and the UK. They have more than 100 beer brands in their portfolio; including a global portfolio of specialized brands, their partner brands and their signature brands of Coors Light, Molson Canadian, Carling, and Miller Lite.
Not only is Molson Coors one of the top ten brewers in the world, they are one of the most innovative companies as well. Beginning in 1786 when John Molson opened his brewery in Canada, then introducing the first corked bottle and handwritten label. Again in 1959, Molson developed the first recyclable aluminum cans and promptly made it available to other drink companies. Again in the recent years, Molson Coors has come out with the Coors Light’s Rocky Mountain, which has a Cold Activated symbol on their bottles and cans and finally a Molson Canadian Widemouth Bottle, to help customers avoid those unwanted beer spills and broken bottles.
Molson Coors main competition is InBev. InBev’s main brands include; Budweiser, Stella Artois, Brahma and Leffe.
Molson Coors Brewing Company Vision Statement and Values Molson Coors Brewing Company has a firm vision for the future and it heavily involves their employees. On the Molson Coors official website, © Molson Coors Brewing Company states:
“At Molson Coors, our vision is simple: We will become a top-tier global brewer. ‘Our Brew’ is the cultural compass that will keep us heading in the right direction. It defines who we are, what we value and how we’ll work together. “ Molson Coors also focusses greatly on their Code of Business Conduct, they believe in “Living Our Values”. The Company has five key values, these include: Excelling, Passion, Integrity & Respect, Creativity and Quality.
Operational Analysis
Quality Management Molson Coors pays special attention to their Product Quality. They conduct an array of tests on every brew for product quality and consistency, in Quality-Control Labs. Tests are conducted at each stage of brewing process, from the raw ingredients to the final product. With chemical analysis, they can measure the purity of the water used, starch content of the grain, hop bitterness, yeast quality, attenuation and many other details. Not only do they monitor the quality of the beer itself, they examine the packaging, and ensure stock rotation to always have the freshest quality products available to the consumer.
Under the supervision of the brew masters, highly trained employees conduct and analysis these tests at the various points of the process. Molson Coors tracks and reports a monthly Quality Index, which cover 58 metrics, including; brewing, packaging, product compliance, quality assurance, food safety and flavour quality.
Product Design Molson Coors is all about innovation and making the customer happy. The company encourages its staff to come up with new ways to make the customer experience more enjoyable, and comfortable. This could include anything from the beer formula itself to the packaging, ways to improve the process in which the beer is made to ways to protect the environment. Molson colours their bottles brown or green to protect the beer from light, this prevents beer from becoming ‘light-struck’.
Molson Coors President and CEO, Peter Swimburn consults with his executive team, of seven other Presidents and CEO from the other divisions of Molson Coors, on partnerships with other beer manufacturers. They decide on the terms and conditions on these partnerships. They listen to what the customer wants, and they act from there.
Location
Molson Coors has nineteen brewing locations located in six different countries, including China, India, USA, Canada, Europe and the United Kingdom. They are generally constructed in high traffic areas, where the raw materials and fresh water are easily accessible. Generally different breweries produce different beers, as each brewery has access to different raw products. For example, Carling is brewed with 100% British barley and Molson Canadian is made with 100% pure prairie barley. Water is the main ingredient in beer, so Molson Coors builds breweries near sources of great brewing water.
Supply Chain Management Molson Coors plans far in advance for everything from raw products to the bottles used. The beer industry is seasonal, where they hit their peak on hot days of summer or over the December holidays. The Vice Presidents in charge of Logistics and Procurement have to plan for the demand, by making sure the brewing, packaging, inventory and the scheduling are planned for accordingly. The Vice Presidents will have a manager directly under them, who are in charge of obtaining global information as fast as possible, so the company has a short window of time to adjust for the change in demand projected.
Molson Coors uses a variety of suppliers within the six countries, depending on what product(s) the brewery manufactures. They do not have an overabundance of raw material on hand, as the brewery manufactures what is needed, due to the shelf life of beer.
SWOT Analysis

Strengths * Innovative with packaging and marketing techniques * Partnerships/ licensing agreements with various other companies * Merger between Molson and Coors in 2005, increased market position * Part owner for The Beer Store in Ontario
Opportunities
* Sponsorship and licensing agreements with outside market vendors * Produce organic or gluten free beer * Produce alternative beverages, to minimize capital risks
Threats
* Any rise in raw materials price, affects bottom line profit margin * Beer is a luxury item, any fluctuation in the economy affects sales * Ability to obtain raw materials * Negative perception that beer is an unhealthy beverage, compared to other alcoholic alternatives
Weaknesses
* Heavily rely on a few popular brands * Dependant on raw materials (aluminum, wheat, barley, hops) * Beer is generally seen as a lower to middle class beverage * Beer sales decrease and increase depending on season
Strengths
* Innovative with packaging and marketing techniques * Partnerships/ licensing agreements with various other companies * Merger between Molson and Coors in 2005, increased market position * Part owner for The Beer Store in Ontario
Opportunities
* Sponsorship and licensing agreements with outside market vendors * Produce organic or gluten free beer * Produce alternative beverages, to minimize capital risks
Threats
* Any rise in raw materials price, affects bottom line profit margin * Beer is a luxury item, any fluctuation in the economy affects sales * Ability to obtain raw materials * Negative perception that beer is an unhealthy beverage, compared to other alcoholic alternatives
Weaknesses
* Heavily rely on a few popular brands * Dependant on raw materials (aluminum, wheat, barley, hops) * Beer is generally seen as a lower to middle class beverage * Beer sales decrease and increase depending on season

Strengths Molson Coors Brewing Company is known for the being innovative; beginning in 1916, Molson Coors survived the prohibition era by making malted milk, near beer and porcelain products. They developed the first recyclable aluminum can in 1959, saving both money and the environment, by reducing waste. They have added the Coors Light’s Rocky Mountain Cold Activated Bottles and Cans to their line up and just recently, the Molson Widemouth, an aluminum bottle with a resealable lid to eliminate the chance of spills. They are consistently looking for new ways to add ease, comfort and style to their consumers. Molson Ltd. has had many partnerships over the since 1786, everything from lumberyards and banks, to cleaning supply companies to multiple beer chains; but when Molson and Coors merged they decided to concentrate on what they did best, beer. Molson Coors has partnerships with a variety of brewing companies, including: Heineken, Grupo Modelo (Corona), Pilsner Urquell, Cristal, SABmiller and a number of other brands. Molson Coors has also purchased and merged with a number of brands, including but not limited to: Carling, Fosters, Starbev, and Creemore Springs Brewing Co. When Molson Inc. and Coors merged in 2005, according to S. Bonham, R. Scudder, B. Morrato and J. Pashak (2006), “the world’s fifth largest brewing company was formed when Coors announced that it would merge with Canadian brewer Molson.” This also increased the market position for the company, ranking it within the top three in Canada, USA and UK.
Molson Coors is a partial owner in The Beer Store, along with Labatt Brewing Company Ltd. and Sleeman Breweries Ltd. This is a smart strategy for Molson Coors, as they not only manufacture and package their products, they also have a mode in which they can sell their products to customers without losing a significant amount of revenue.
Weaknesses
Although Molson Coors has an extensive array of products from Lagers, Ales and Craft/ Special Occasion beers, they heavily rely on their most popular brands. This could leave the company vulnerable to external competition. If the competition adds a new premium product or new marketing campaign to increase their market share, this could bump sales from Molson Coors. Molson Coors is highly dependent on their raw materials for the production of their products, including; aluminum, wheat, barley and hops. If the cost of these materials increase or become scarce, this could drive the price of beer higher. If this happened, it could result in layoffs, increase production costs and potential closures of manufacturing plants. Beer products are generally seen as a lower to middle class beverage. This makes sales dependent on the economy, if the economy is poor, sales will decrease, as beer is not a necessity to survive. Beer sales decrease and increase depending on season. Beer is generally perceived as a refreshing beverage. Needless to say, in warmer weather, when thirst levels have increased, sales will increase.
Opportunities
Molson Coors should contemplate sponsorship and licensing agreements with outside market vendors. Some vendors could include theme parks, NASCAR events, or baseball functions. This would increase exposure to potential customers. There is a huge market for organic and gluten free products, within Canada and the USA. As more consumers are worried about their health and well-being, they may be more inclined to look at the ‘healthier’ option for their alcoholic products. With the economy being slightly unstable still, Molson Coors could diversify their portfolio with alternative beverages, such as water, soda or other types of liquor. This would help Molson Coors minimize their chance of financial risk.
Threats
If the cost of raw products rises, this will directly affect the company’s profit margin. Molson Coors would either have to raise the cost of beer to the customer or would have to cut costs within the manufacturing and packaging department. This can be accomplished by employee cut backs (hours, wages or loss of employment), production changes or cut backs and many other ways. The economy is a major factor in the distribution of beer, as beer is seen as a luxury item. If the economy is on a downturn, sales will decrease and Molson Coors will have to compensate and strategize to maintain profit. Molson Coors is heavily dependent on their ability to obtain raw materials. If their raw materials become scarce, they will have to import products in from other countries, driving the cost of manufacturing up. If the raw materials become extinct, substitutes will have to be used. This could affect taste and quality in a negative way, with a potential for lost sales. Customers have a negative perception that beer is an unhealthy beverage, compared to other alcoholic alternatives. Molson Coors needs to ensure it is offering alternatives, including low calorie, gluten free or an organic option.

Porters Five Forces
Competitive Rivalry within an Industry * Large industry, with many competitors. Companies are fighting for market share through innovative ideas, ex: packaging, new formulas, etc. * Low storage cost, do not have to liquidate product to make room for new products
Competitive Rivalry within an Industry * Large industry, with many competitors. Companies are fighting for market share through innovative ideas, ex: packaging, new formulas, etc. * Low storage cost, do not have to liquidate product to make room for new products
Threat of Substitute Products * Large number of available substitute products on the market
Threat of Substitute Products * Large number of available substitute products on the market
Bargaining Power of Suppliers * Distribution cost is low, due to the large quantity shipped at once and the large number of breweries across the world * Location of breweries are centralized in different countries to allow for the greatest amount of raw materials
Bargaining Power of Suppliers * Distribution cost is low, due to the large quantity shipped at once and the large number of breweries across the world * Location of breweries are centralized in different countries to allow for the greatest amount of raw materials
Threat of New Entrants * High cost makes it difficult for competitors to enter into the market * Strong distribution network is required, making it difficult for competitors to enter * Advanced technologies are required to keep cost down for the consumer * Government regulations affect new entrants * Geographic location are important for raw materials
Threat of New Entrants * High cost makes it difficult for competitors to enter into the market * Strong distribution network is required, making it difficult for competitors to enter * Advanced technologies are required to keep cost down for the consumer * Government regulations affect new entrants * Geographic location are important for raw materials
Bargaining Power of Customers * Customer loyalty for product, especially when price is a factor * Molson distributes their own product, making the cost lower for customers * Diversity in brands, always for more options for customers
Bargaining Power of Customers * Customer loyalty for product, especially when price is a factor * Molson distributes their own product, making the cost lower for customers * Diversity in brands, always for more options for customers

Product Life Cycle
Cold Activated Bottles and Cans These bottles and cans feature a thermochromatic ink that turns blue when the container is chilled to the perfect temperature. See below for an example.

This product is in its Maturity Stage. The product was released in 2009; with a change in product design. This is currently the number one beer brand among Canadians. Molson Coors didn’t change the formula for the Coors Light, they only changed the packaging. Almost everyone knows about this product, due to the uniqueness of the packaging. Molson Coors has to defend their position in the market, and with their promotional pricing in the summers, their commitment to quality and strong Logistics department, this is completely achievable.
Widemouth Bottles These bottles are constructed from aluminum and contain a resealable lid. Molson Coors is promoted this product to the average beer drinker, who may have a mishap at a social gathering. This product is currently in the Introduction Phase. This product was just released earlier this year. Molson Coors spent approximately $13.5 million on the new packaging line in Toronto, Ontario. The bottle is 100 percent recyclable, helping reduce waste in the environment.

References

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