Molson and Coors Claim Merger of Equals

In the brewery world, there's SAB Miller, there's Anheuser-Busch, and there's the other guys. Because the barriers to entry in the beer market are so low (homebrewing is a feasible hobby for most), there will always be newcomers. When it comes to international marketing and distribution, however, there may not be room for many more. Canada's Molson and Colorado's Coors have decided to merge as equals in an effort to hold better than their own. While they have not done it perfectly, the idea is a sound one.

The new company formed by the merger will be uncreatively know as the Molson Coors Brewing Company with revenues of about US$6 billion per year. The companies' experts claim $175 million extra will turn up through new sales and cost cutting. Neutral observers are less impressed -- there is little room for streamlining they believe. Coors chief executive Leo Kiely will be the new CEO while Molson chairman Eric Molson will be the chairman of the new entity. Executive headquarters will be in both Denver and Montreal. These are probably necessary for internal political reasons, but keeping homes in two cities in two separate countries and cultures is wasteful.

Then, there are the branding issues. Coors sells its rather tasteless drink as a Rocky Mountain fantasy, including possible future US Senator Pete Coors tromping through snow on a forested mountainside. Meanwhile, Molson's leading brand "Canadian" relies on the largely substantiated perception that Canadian beers are better than their US counterparts. Quite how this will dovetail is not clear.

Be that as it may, the two companies both have a loyal following, and the opportunities for expanding their businesses in one another's country is greater united than separate. The real advantage will be in purchasing -- raw materials will come cheaper.

That said, there is the usual joy of dealing with family businesses -- Ian Molson, a former deputy chairman, wants to stop the deal. He's thinking of offering $4 billion for the family brewery, and in the end, the fight could be very bitter if his 10% of the voting stock at Molson holds the balance. It's enough to drive one to drink.


© Copyright 2004 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.


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