Industry and Competitive Situation Analysis: BEER INDUSTRY

1. Team 3 Mason Mitchell Randy Greinert Sarah Yelverton Alec Cooper Industry and Competitive Situation Analysis:BEER INDUSTRY

2. The Beginning • 3, 000 B.C. -mainly starches and sugars • Modern day Iraq • 2 Flavors • Malt dried over open flame • Hydrometer Invention • Better quality malt • Colonists/Corn

3. Coors • 1880 • Adolf Coors • Golden, Co • Prohibition • “Silver Bullet”-Bill Coors

4. Coors and the rest

5. Product Life Cycle • Intro- uncertainty • Growth- intense competition and climb • Mature- stagnant • Decline • Blue Moon, Bud Light Lime- growth stage (helped super premium segment advance 27.3%)

6. Imports on the Decline • Corona Extra and Heineken biggest imports • Corona Extra down 4.6% • Heineken down 5.5% • Both account for over half of imports in United States • Our spin: Bud Light Lime has stolen customers due to growth stage

7. Modelo • Mexican beers dominate import category (4 of top 6) • S&P relates this growth to rise in Mexican population, especially in CA. • Will continue to grow

8. MicroBrew • Also Called Craft Beer • Make limited amount of beer out of small breweries • MicroBrew category has grown consecutively for 25 years • Grew 5% in 2008 • Limited edition seasonal beers and differentiation attribute to their success • Samuel Adams of Boston Beer Company is category leader

9. Market Dominaton • Rule of three and four: 78% of US beer market owned by MillerCoors and Anheuser-Busch

10. US sales 2008 • Anheuser-Busch- 48.6% market share • MillerCoors owned 29.4% of the volume

11. Top 20 Beer Brands US • 1) Bud Light • 2) Budweiser • 3) Coors Light • 4) Miller Light • 5) Natural Light • Only recognizable beer that was non big two was Pabst Blue Ribbon at 18

12. Light Beer • 51.8% share of beer consumption • Increase of 2.2% in 2008 • Bud Light is now the leading brand in the world

13. S&P on MillerCoors • Sold 64.5 million barrels of beer in 2008 • Up 0.4% from 2007 • Sold 64.3 million barrels in 2007 • Up 4.8% from 2006 • Own and operate 8 US breweries

14. Consolidating Global Beer Market • US beer companies are trying to establish presence in potentially lucrative markets in Asia, Eastern Europe, and Latin America. • Doing this through exports, joint ventures with local brewers and distributors, and purchases of equity interests in local brewers. • In 2005, world’s top ten brewers accounted for 61% of international sales volume.

15. Molson Coors global • Acquired Carling from Bass Brewers, which made them a player in the United Kingdom. • Also export products to Australia, Japan, and Caribbean Islands

16. Increasing Target Market • Age range 21-24 increased in population for the first time in two decades

17. Advertising • $975 million dollars spent in 2007 • Molson Coors spent $151 million dollars • SAB-Miller spent $175 million dollars • Anheuser-Busch spent $378 million dollars • Mainly target men with commercials on television during sporting events

18. Competition • Not only from other beers, but wine and spirits • With spirits you can create a variety of flavors with mixers • Expanded spirit marketing • Health-Conscious people shifting to wine and spirits in moderation • People are more time efficient than ever

19. Overview of the Company: 2005 Molson and Coors merged to form Molson Coors Fifth largest brewer in the world Molson Coors has the 2nd highest sales within the industry behind Anheuser-Busch Company Analysis

20. Performance Indicators: • Following the merger in 2005 Net Income and operating revenues for Molson Coors increased until 2007 • From 2007 to 2008 the company experienced a decrease in net income and operating revenues as a result of a change in economic conditions and the joint venture with Modelo which was not consolidated yet on the financial statements Net Income Operating Revenues

21. The companies current ratio has increased from .08 to 1.1 which shows the firm is becoming more liquid • The return on assets ratio has increased in recent years showing Molson Coors increase in efficiency in generating income from invested capital • Molson Coors earnings per share have varied over recent years due to the 2005 merger and the current recession

22. SWOT • Strengths: • Strong industry position • Portfolio of strong brands • Strong financial performance • Weaknesses: • Dependence on few products • Reliance on third party service providers

23. Opportunities: - Strategic Agreements • Growing Hispanic population in the US • Growing beer consumption in Asia • Threats: • Government regulations • Changing consumer preferences • Industry consolidation

24. Strategy • Performance improvement strategy to build and strengthen capabilities • Reduce general and administrative expenses by business process outsourcing • Standardize business processes in finance, IT services, and HR • Strong brand recognition to obtain a competitive position • Increase in advertising and marketing expenditures

25. Industry change Rise of wine, spirits, and craft beer 34% wine 40%beer 22% spirits In 1995 beer was 46% now 40% People are becoming more health conscious Increase in Mergers and acquisitions

26. Strong and Weak Companies • Anheuser-Bush • Molson Coors • Pats Blue Ribbon • Decreasing market share 2007 5.9% 2008 2.7% • Beer ranked 18 out of 20 top beers

27. Competitive Moves • Mergers and Acquisitions • Pats Blue Ribbon • Boston Beer Company • Add craft brewers to product mix • 312 • ESB

28. Completive success • Advertising • Product differentiation • Synergy and cost reduction

29. Industry attractiveness • $99.3 billion industry • Industry growing during recession • Over 21 population is growing