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Molson Coors Canada

Molson Coors Canada. Stock portfolio and company analysis. Agenda. Company Profile SWOT Analysis Recommendations Demand Competition The Broader Environment. Company Profile.

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Molson Coors Canada

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  1. Molson Coors Canada Stock portfolio and company analysis

  2. Agenda • Company Profile • SWOT Analysis • Recommendations • Demand • Competition • The Broader Environment

  3. Company Profile • In 2005, Molson (since 1786) and Coors (since 1873) merged to create the Molson Coors Brewing Company; in business for 6 years. • CEO: Dave Perkins • Molson-Coors Canada employs over 10,000 people • Breweries are located throughout the country; main office in Toronto • Offer 13 brands of beer • 13 people on the BOD; including Peter H. Coors and Andrew T. Molson • Molson Coors Community Cheer & Ultimate Day “Beer is our passion, our heritage and our future.”

  4. SWOT analysis • Strengths • They are an innovative company (Molson 67/Cold Certified) • The company also has licensing agreement for Canadian market with other leading brands, which include: Amstel Light Heineken and Murphy's, Asahi and Asahi Select, Miller Lite, Miller Genuine Draft, Miller Chill, Milwaukee's Best and Milwaukee's Best Dry, Miller, and Foster's. • Employ/Sponsor • Weaknesses • They are dependent on raw materials such as aluminum, wheat, barley, and hops (the price of these goods has dramatically increased since 2008) • Social perception that beer is for middle to lower class members of society

  5. SWOT Analysis • Opportunities •  They can produce a line of Organic Beer, Gluten free beer, or move into the higher priced market of beers; Producing liquor or soda can also diversify risk, as sales of beer fluctuate.  Create types of beer that may appeal to different groups (E.g. making an Oktoberfest brew) Design new packaging (E.g. different shaped bottles/different labels) • Threats •  Competition is a huge threat in the alcoholic beverage market since there are a large variety of companies, thus a large amount of competition. Top competitors include: Ashai, Carlsberg, Kirin, and Tsingtao. •  Any significant increase in raw materials prices will negatively affect their margins. Any significant decrease in the ability to obtain their raw materials will also affect their margins. •  A negative perception that beer is not as healthy as other alcoholic beverages such as wine. Most beers have a high gluten content which is not appealing to many customers.

  6. Recommendations • Continuity • Innovation (fruit beer/heritage beer) • Obtain larger market share

  7. The marketplace: Demand • End of the 3rd Quarter (2011): • Net sales: $954.4 million, +9.1% • Worldwide beer volume: 13.13 million hectoliters, -0.8% • Net Sales for the first three quarters increased • Although less beer was sold, more net sales were generated • ESTIMATE FOR FUTURE DEMAND • At this point in 2011, we are already a percentage into the year. Based on the year to date results, we can make assumptions on the performance of Molson Coors Corp. for the last quarter of the year.

  8. The marketplace: Demand • Raw materials used for making beer have had lower crops yields in 2011, and price increases range from 40% to 80% for barley and 20% to 100% for hops. • The forecasted increase in net sales for 2011 and 2012 is all from price increase, and not as a result of increase in volume sold. • We forecast that for 2013 net sales will continue to increase at a rate of 6%, as the price of beer will increase due to higher cost of commodities. • As a result of high unemployment among core beer consumers, we are forecasting a decrease in hectoliters of product sold in 2011 by 1% and 2% in 2012.

  9. The marketplace: Demand • OPPURTUNITIES FOR GROWTH • “2010 was a year of good progress in building our brands, innovating, reducing costs, strengthening our balance sheet, and generating cash. We introduced new brands and value−enhancing innovations in each of our businesses to drive the top−line, exceeded our cost−reduction targets for the year, and used a portion of our free cash flow to fund our pensions and reduce balance sheet risk.” - Peter Swinburn, President and CEO of Molson-Coors Brewing Company • “…We continued to pursue all three of our growth strategies: maximizing the value of our core markets, expanding our exposure to emerging markets, and taking advantage of smart M&A opportunities. With these growth strategies, profit and cash generation, and our disciplined use of cash, we remain tightly focused on building long-term value for our shareholders." – Peter Swinburn, President and CEO of Molson-Coors Brewing Company

  10. The marketplace: Competition • Molson-Coors along with Anheuser-Busch InBev and Sleeman breweries make up about 90% of the market share in Canada. • Market analysis • -Anheuser-Busch InBev (44%) • -Molson-Coors (40%) • -Sleeman Breweries (6%) • -Moosehead Breweries (5%) • -Other (5%) • Moosehead Breweries • -The largest independently owned and operated brewery in Canada • -Based out of Saint John, NB. This company is incredibly loyal to the Maritimes. • -Holds 5% of Canada’s Market share. • -Known for its flagship beer Moosehead Lager but also produces several different brands of Moosehead as well as Alpine and several other brands. • -Moosehead also holds production-contracts for several other foreign beers such as Samual Adam’s Boston Lager.

  11. The marketplace: Competition • Anheuser-busch • - Largest brewing company in the world. • Brews popular beers such as Budweiser and bud light • Holds the number 1 market spot in Canada with a 44% market share • Has 6 different breweries active across Canada and employs 3000 people. • Stock is currently trading at a value of $56.87 per share. 52 week high is $64.53. 52 week low is $49.05 • SleemanBreweries • -Company owned by Japan’s Sapporo Breweries • -Holds the number 3 market position in Canada • -Brews Sleeman but also holds production contracts for Stroh, Old Milwaukee, Colt 45, Pabst, and Schlitz as well its parent company’s Sapporo- Operates 5 breweries in Canada

  12. The broader environment • Economic forces such as interest rates, GDP and unemployment do have an affect on sales. • As unemployment increases sales decrease. The same can be said about interest rates and GDP • The Canadian economy is currently coming out of its recession, therefore the economy is strengthening and sales should continue to rise.

  13. The broader environment • Domestic Government and Political Forces: • The Canadian government regulates the alcoholic beverage industry in many ways: • Advertising • Beverage Contents • Legal Drinking Age • Taxes • Social and Cultural Forces: • Opposition in history (prohibition) • Religious/Moral Opposition • Negative medical affects • Health and Scientific community pushing to eliminate alcohol • Microbreweries

  14. The broader environment • Technological Forces: • Home brewing • Microcarbonated lager (Molson M) • Innovative (cold activated cans/ • Natural Forces: • Beer is made from natural products such as water, hops, barley and yeast. • Any disturbances to these inputs would likely negatively affect the production of Molson-Coors products. • The prices of these commodities can often be unpredictable. • Demographic Forces: • There are changing tastes among young and old generations. • Baby boomers, who make up a large percentage of Molson-Coors’ target market, are beginning to prefer wine and spirits to beer. This is likely due to recent health studies and dietary trends. • Younger consumers are also beginning to prefer spirits to beer, causing potential problems for growth and establishing a young customer base.

  15. References • http://people.forbes.com/profile/peter-swinburn/54604 • http://www.eluta.ca/top-employer-molson-canada-toronto • http://people.forbes.com/profile/david-perkins/54609 • http://phx.corporate-ir.net/phoenix.zhtml?c=101929&p=irol-reportsannual • http://www.wikinvest.com/stock/Molson_Coors_Brewing_Company_(TAP) • http://moosehead.ca/home/ • http://www.answers.com/topic/sleeman-breweries-ltd#ixzz1efTYAQ2G • http://phx.corporate-ir.net/phoenix.zhtml?c=101929&p=irolnewsArticle&ID=1624816&highlight • http://www.tradingeconomics.com/united-states/gdp-growth • http://www.econ.ucsb.edu/~tedb/Courses/Ec1F07/craftbeer.html • http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9NDE3NTAxfENoaWxkSUQ9NDMwMTUyfFR5cGU9MQ==&t=1 • http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MzczNzQyfENoaWxkSUQ9MzcxNjIyfFR5cGU9MQ==&t=1 • http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MzMwNjE2fENoaWxkSUQ9MzEyNDUwfFR5cGU9MQ==&t=1 • http://www.answers.com/topic/adolph-coors-company • http://marketsensus.com/molson-coors-brewing-company-tap-financial-and-strategic-swot-analysis-review-2 • http://www.ourcommunitycheer.com/homePage.aspx • http://www.theglobeandmail.com/globe-investor/news-sources/?date=20110906&archive=cnw&slug=C8696 • http://www.bizjournals.com/denver/print-edition/2011/10/14/molson-coors-growth-pushed-by-joint.html?page=all  

  16. Cheers!

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