Case Analysis – Adolph Coors in the Brewing Industry

The Adolph Coors Company has brewed beer since 1873. The company survived Prohibition and thrived in the many years that followed (Ghemawat 6). In fact, according to Ghemawat, the company posted uninterrupted year-to-year volume gains between 1951 and 1974 (6). However, during the mid-1970’s to mid-1980’s, Coors’ competitive position in the U.S. brewing industry began to deteriorate. This was as a result of diminished capacity utilization in the west and poorly planned expansion to the east. Although challenging for the company, the company may still improve its future prospects through better leadership and improved marketing activity.

Beginning in the late 1970’s, Coors’ capacity utilization diminished because of increased competition in the West as well as internationally with the Dutch brewing company, Grolsch Brewery (Ghemawat 8). Until that time, the area was underserved, and Coors consistently exceeded the capacity utilization because it had been the only company with a brewery located within the region (in Colorado). The other competitors were all located outside of the region (in Texas, Missouri and Wisconsin) until Anheuser-Busch and Miller added a combined 14 million barrels in capacity in California (Ghemawat 8-9).

Until 1976, Coors was a regional company, with a restricted distribution territory of 11 states. That year, the company began a national rollout into the east, until it reached all 50 states by 1990 (Ghemawat 9-10). While the growth was intended to increase sales and generate revenue for the company, the expansion had a negative financial and operational impact on the company by increasing shipping distances and requiring new distribution centers. The company also contracted with weaker wholesalers who were willing to carry Coors as their lead brand in these new states, but their weaknesses did nothing to enhance Coors’ competitive position in these new territories (Ghemawat 9).

However, there were signs that the company could still improve its future prospects. In 1985, the leadership of Coors also changed. The older family members – Bill and Joe Coors – resigned as CEO and President, respectively (Ghemawat 7). The younger Coors – Jeff and Peter – assumed control of the holding and brewing company, respectively. The new leadership promoted aggressive and successful marketing campaigns, such as those for Coors Light and the Silver Bullet. The new leadership also committed to avoid controversy, and repair Coors’ tarnished corporate image of being anti-minorities (Ghemawat 7). The company spent significant dollars in these activities and those should continue to improve future prospects.

Another positive move for the company was the introduction of new brands into the beer market. When compared to Anheuser-Busch’s six brands, Coors was underrepresented with only one brand going into 1978. Coors introduced several more brands in the late 80’s, and even moved into Canada through a license with Molson to produce beer in that country. Although challenged by “early technical and operational problems,” positive strides in marketing contributed to the success of the brands and profitability for the company (Ghemawat 11). Coors can now also take advantage of segmentation and compete in different markets for customers, while relying on a well-established brand name and existing production and packaging facilities (Ghemawat 5).

While Coors faced challenges in the 1970-80’s, the company’s decline was not without explanation, and is not without remedy. There is still hope for the company and its future

Work Cited

Ghemawat, Pankaj. "Adolph Coors in the Brewing Industry." Harvard Business School, vol. 9-388-014, 1992, pp. 1-21.