Coors analysis

Introduction

Adolph Coors is one of the six largest brewing companies in the United States. The beer company was founded in Golden, Colorado, in 1873 by Adolph Coors, Sr., making near beer, malted milk, cement and porcelain from agricultural inputs.

Adolph Coors was praised in the late 1970’s as one of the best investment opportunities in the market. It became quite successful following the repeal of Prohibition. Contributing to its success were economies of scale that resulted from controlling its production costs by focusing on only one product, running the fastest packaging lines in the industry and operating the largest breweries. The brewing division in 1985 accounted for 84% of Coors’s revenues and over 100% of its operating income. The chairman Bill Coors acknowledged that the company’s future fortunes were to be tied to brewing.

The Coors performance has deteriorated since then. Competitive pressures forced the company to move from one product package to several product packages.

Why Coors's competitive position deteriorated

The production of beer by Coors was more costly than other companies; this is because they canned most of their beer unlike other companies although bottles were cheaper than cans. They also had a longer brewing cycle than other companies this increased their capital. Coors aged its beer for 70 days compared to an average of 20-30 days for other brewers. This increased the costs of the beer when Coors did a national roll out. They had a competitive advantage since they had a limited distribution area but as it increased their competitive advantage reduced as compared to other major brewers.

Unlike other major brewers Coors did not pasteurize the beer claiming that intense heat harmed the taste of be...

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...mprises of the Coors family members.

Coors should have a cash appropriation strategy since they want to roll out a nationwide and later a global expansion strategy. They should begin to issue additional shares to be evaluated in relation to investor’s desirability. Should appropriate its financial accounts based upon its capital needs for nationwide and global expansion.

Due to Coors financial demands that are associated with expansion and acquisition of nationwide and global brewers. They will need to have a joint venture with other brewers so as to get a market share in the developing countries than its competitors.

Coors should expand its production facilities within the United States so that it can satisfy the growth objectives. The expansion should be controlled to eliminate high production and overhead costs that can result to under-utilization of resources.