Coors Brewing Company
Subject: Business Strategy
Throughout most of its history, the Coors Brewing Company (Coors) has been a regionalized brewer within the United States, specializing in high-quality beer through by virtue of its source water selection, stringent production standards, and cold filtered brewing approach. As the company expanded its distribution to new markets within the U.S. in attempt to gain market share, it made a strategic decision to maintain a majority of its brewing operations at its primary production facility in Golden, Colorado. This decision was based upon the desire to preserve its core production strengths through close family control. However, as the company desires to expand its market presence beyond the
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Coors brewing process included four unique components that bolstered its drinkability: a natural fermentation process, 70 days of aging versus the 20 days of aging Coors’ competitors employed, lack of pasteurization whose intense heat would harm the beer, and refrigerated shipping. Coors’ cost advantage from scale, capacity utilization, and other cost saving components allowed them to use higher quality inputs and a more capital intensive brewing process as they attempted to create the perception of a natural, high quality product. With their beer perceived as a natural and high quality product, Coors was able to price it high relative to their customers while maintaining a high volume of sales. Finally, Coors managed their distribution channel very closely. Distributors had very little power when negotiating with Coors. Coors received hundreds of applications from potential distributors for a single distribution franchise, and was able to force wholesalers to give up other brands if they wanted to carry Coors. High up-front investment by distributors resulted in switching costs that kept distributors loyal. The market power Coors held over its distributors allowed Coors to capture much its added value.
Performance Declines from 1977 to 1985
By investigating a number of key metrics, comparing the changes from 1977