Canada: Molson Coors pushes brand power in drive to dominant role in global beer market

Brand power is the byword for success in the global beer game and Molson Coors Brewing Co. plans to tap more from its big-name brews and become a dominant player in the global beer market, the company's CEO said May 17.

The first year of merged operations between the former Montreal-based Molsons and Denver-based Coors was a tough one with fierce competition in each of its major markets, Leo Kiely told shareholders at the company's annual meeting.

But Molson Coors is pledging to build on the brand success of the Coors Light and Molson Canadian beers to position itself as a top global performer, he said.

"There are some significant global trends that will determine who will win the global beer game," Kiely told the company's annual shareholders meeting in Denver.

"These trends are about brands, beer, market-building skills and scale. Strong brands, both local and global, are becoming increasingly important as drivers of growth, consumer differentiation and greater profitability."

Molson Coors will be pushing "beer - refreshing beer," Kiely said with gusto, "because the highly successful beer brands of the future will be cold, refreshing light lager brands."

Premium beer brands have been undercut in recent years by value brands - basically the cheapest beers on the market - and by consumers with more fickle tastes and money-conscious pocketbooks.

Kiely also said that so-called market-building skills such as distribution, product quality and presentation will help consumers recognize and want Molson Coors brands.

"The way you make money in beer is to have high share in significant markets. Beer is a scale-driven business - in brewing and operations, distribution and in marketing and advertising; scale in definable markets."

Kiely said the brewer, which merged in early 2005, entered this year with improving sales volume trends.

"In Canada, we stabilized the Molson Canadian brand while we accelerated Coors Light growth," he said.

In the United States, he noted that Coors Light is the No. 1 brand in some markets.

"In the U.K., we strengthened our brands for continued growth in lager, lowered our overall infrastructure costs, and our cost reduction and synergy program delivered results."

The American-Canadian brewer will deliver all $175 million of a three-year cost saving program and has identified a further $75 million in cost-saving opportunities by 2008, he told shareholders.

"Looking back, 2005 was a tough and fundamentally transformational year for our company" and the goal ahead is to "become a top-performing global brewer."

Molson Coors is the world's fifth-largest brewer with net sales of more than $5.6 billion US. Molson Canada is the largest brewer in Canada while Coors is the third-largest brewer in the United States.

Molson Coors has its head office in Golden near Denver and reports in U.S. dollars. It recently announced its first-quarter results of net sales of $1.15 billion in the 13 weeks ended March 26, compared with $1.05 billion a year earlier.

Stock in the firm gained 59 cents to $73.75 in May 16 trading on the Toronto Stock Exchange.

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