Canada: Molson Coors to open brewery

Molson Coors, which brewed its first batch of Coors Light in a new Virginia brewery just three months ago, will open another new brewery in Canada, Tuscaloosa News reported June 8.

The $33 million facility in Moncton, New Brunswick, is scheduled to open this fall. It’s far smaller than the 100,000-square-foot Shenandoah Brewery in Elkton, Va.

The Moncton plant will give Molson Coors a presence in the Maritime Provinces, a section of eastern Canada.

“We didn’t have a local brewery there. It made it much more expensive for us to serve that market," Ian Freedman, Molson Canada’s chief strategy officer, told analysts this week. “With the building of a brewery and becoming one of the local brewers, we are able to compete more effectively with the other players in that market."

It’s the same strategy that prompted Molson Coors to build the Shenandoah brewery. That plant cuts the cost of brewing and shipping beer to lucrative markets in the East and is expected to eliminate $30 million in annual costs.

Coors Light, which has been gaining market share throughout Canada, and other company brands, have significant potential for growth in the Maritimes, Stifel Nicolaus analyst Mark Swartzberg said.

The beermaker, headquartered in Denver and Montreal, initially will brew Coors Light and Molson Canadian in Moncton.

“It is possible it will eventually export to New England," said Molson Coors spokesman Paul De la Plante.

Analysts recently have been speculating about Molson Coors’ future, following comments by Norman Adami, president of SABMiller’s Americas division. Adami told analysts there would be cost efficiencies in a marriage of the two brewers.

The addition of two breweries probably wouldn’t increase the company’s attractiveness to a suitor, said Harry Schumacher, editor of trade publication Beer Business Daily.

“In the long term it does make them more attractive because it will save money in transportation costs and it is cheaper to brew in these modern breweries," he said. “But in the short term it makes them less desirable because they have this big asset that they are paying off."

SABMiller is the parent of Miller Brewing Co., the No. 2 brewer in the U.S. after Anheuser-Busch.

A merger with No. 3 U.S. brewer Molson Coors would produce significant savings for both companies, B. Craig Hutson, an analyst with independent corporate bond research service Gimme Credit, said in a research note.

Any company that wants to acquire Molson Coors would have to pay a hefty premium because the 19 percent increase in the stock price so far this year has raised its value, he said.

Even if a brewer is willing to pay the price, the Coors and Molson families would have to agree to a sale, he added.

“Two-thirds of the voting power of the company is controlled by the Coors and Molson families, both of which have a long history in the brewing industry," Hutson wrote. “The biggest hurdle is that we do not believe (Molson Coors) is for sale."

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