Molson Coors & Anheuser Busch InBev

1. Molson Coors & Anheuser Busch InBev An External Analysis of the Beer Industry Presentation By: Emily Horstmann, Eric Hyde, Claudia Ortiz and Megan Walzel

2. Broad Environmental Trends • Craft Beer Craze • Sales from 2008 to 2013 shot up annually • Losers: No. 1 Bud Light & No. 4 Miller Lite had a decrease in sales this past year • Though light beers began declining about five years ago, their descent has accelerated this year • Together the two brewers control nearly 97% of the light-beer market in U.S. (kind of a big deal…) • Flavored Beverages (Bud Light Lime-A-Rita, Cran-Brrr-Rita) • (Lackluster ads recently) men drinks vs. women (20%) • Only one beer campaign has achieved pop-culture acclaim in recent years-Dos Equis' "Most Interesting Man in the World."

3. Sociocultural • Today's 21- to 27-year-olds grew up expecting variety • Redd's Apple Ale introduction has seen success • Innovation to compete with liquors as well, which have found success with flavorful varieties and dessert-inspired vodkas like Smirnoff Cinna-Sugar Twist (getting out of hand a bit?)

4. Global • Developing markets remain the engine of volume growth for the global beer industry • Brazil, Russia, India and China (BRIC) are recording the highest rate of market growth within the global beer industry, generating almost $108 billion in 2010

5. Broad Environment Continued • Political/Legal • Highly regulated industry with moderate differentiation among countries • Less regulation among emerging markets • Faces more sin taxes • Economic • In the US, adult male unemployment has decreased from 10.4% in Oct. 09 to 7% in June 13 • Blue-collar males in their 20s, were battered by an economic downturn that hammered industries such as construction • Beer sales volume hit disproportionally, dropped significantly during recession and have recovered slowly since

7. Technology Coors Cold Activated Miller Vortex

8. So…is Beer Attractive? • Non-price based rivalry • There is a lot of product differentiation within the industry • Beer style is the term used to differentiate and categorize beers and meet consumer preferences • Beer styles can vary depending on the color, flavor, strength, ingredients, production method, recipe, history, or origin of the beer • All major companies offer different variations based off their core product • Beer is classified as a lager or ale

9. Five Forces Analysis

10. Five Forces Model Continued • Competitive Rivalry Within Industry—Low • Variation of products and advertising is low: if one firm launches a new ad campaign or product, others follow • Mergers and Acquisitions are common • Top 4 brewers worldwide: AB InBev, Molson Coors, Heineken, and Carlsberg control 50% of global share • Threat of New Entrants—Medium-Low • Large brewers experience significant economies of scale • Very capital intensive industry to enter and highly regulated • Boom of craft brewers over the last few years

11. Five Forces Model Continued • Bargaining Power of Suppliers—Low • The main players in the beer industry take up a majority of their suppliers’ business • Suppliers are dependent on the beer industry • Bargaining Power of Customers—Medium • The beer consumer is generally economically sensitive • Consumers are interested in new, trendy craft beers • Threat of Substitute Products—Medium-High • Wine and spirits industry is gaining market share • Recent poll states: 36% of alcohol drinkers prefer beer, 45% prefer wine as opposed to 47% preference to beer and 27% preference to wine in 1992 • Beer is perceived as less healthy and less classy than substitutes

12. Same Strategic Group • Both operate in broad markets offering a wide variety of products catering to specific segments • Anheuser-Busch—100+ beer brands • Molson Coors—200+ beer brands • Both are cost leaders

13. Is this a good industry to be in? • Moderate attractiveness (based on Porter’s 5 forces) • Sales dependent on disposable incomes • Beer industry tends to have a direct relationship with the state of the economy

14. Competition in the same nations • The majority of operations are conducted in the same nations including: • The United States • Canada • The United Kingdom • Other mutual markets include: • China • India • Russia • Spain • Ukraine

15. Works Cited Schultz, E.J. "Draft Dodging: Why Big Beer Is Going Flat." Advertising Age 84.32 (2013): 16. Business Source Complete. Web. 21 Oct. 2013. "Is Beer a Reflection of the World Economy?." Wealth Wire - Investing News. N.p., n.d. Web. 22 Oct. 2013. <http://www.wealthwire.com/news/global/3591>. "The Wall Street Flaneur." The Wall Street Flaneur. N.p., n.d. Web. 22 Oct. 2013 Kurtzleben, Danielle. "Poll: More Americans Ditching Beer for Wine." US News. U.S.News & World Report, 02 Aug. 2013. Web. 22 Oct. 2013. "Factors That Affect the Beer Industry." Factors That Affect the Beer Industry. N.p., n.d. Web. 22 Oct. 2013. "About Us." Molson-Coors. Molson-Coors Brewing Company, n.d. Web. 22 Oct. 2013. "Anheuser-Busch InBev - About AB InBev -." Anheuser-Busch InBev - Home. N.p., n.d. Web. 22 Oct. 2013.