Adolph Coors in the Brewing Industry
1. Coors was very successful through the mid-1970s. How was its value chain configured up to that point? What type of generic competitive advantage did such a value chain confer? (Please focus your analysis on procurement, manufacturing, marketing, and distribution functions).
* Procurement * Long-term contracts with farmers * Can recycling for further use * Spring water from Colorado * Grain processing facility that supplied a third of its refined cereal starch * Sourced all its cans from a captive can making facility * Labels and secondary packaging * Above-average vertical integration * Built many of its equipment
* Manufacturing * Aged beer for 70 days (natural fermentation vs. additives.) * No pasteurization * One kind of beer * Fastest packaging lines in the industry * Own rice and grain processing facilities * Above-average vertical integration * Spring water from Colorado * Unique brewing process
* Marketing and Sales
Price
* Premium beer
Promotion * Advertising (Please do not buy our beer)
Product * Premium beer * Relatively light body
Placement * Target niches in which its penetration had been limited * Median distance Coors shipped its was 800 miles * Each new wholesaler had to spend about $500,000-$2 million on market development * Over two-thirds of the company's wholesalers then carried no other brands
I think that Coors’ competitive advantage was established through a differentiation strategy, which was basically the main factor for its success. The company was using several combined factors from its different divisions; special spring water from Colorado, was aging its beers for 70 days with natural pasteurization instead of the industry average of 20 with additives. Over two third of the company’s wholesalers carried no other brands and the company was charging relatively higher price in the industry (the calculations are
* Procurement * Long-term contracts with farmers * Can recycling for further use * Spring water from Colorado * Grain processing facility that supplied a third of its refined cereal starch * Sourced all its cans from a captive can making facility * Labels and secondary packaging * Above-average vertical integration * Built many of its equipment
* Manufacturing * Aged beer for 70 days (natural fermentation vs. additives.) * No pasteurization * One kind of beer * Fastest packaging lines in the industry * Own rice and grain processing facilities * Above-average vertical integration * Spring water from Colorado * Unique brewing process
* Marketing and Sales
Price
* Premium beer
Promotion * Advertising (Please do not buy our beer)
Product * Premium beer * Relatively light body
Placement * Target niches in which its penetration had been limited * Median distance Coors shipped its was 800 miles * Each new wholesaler had to spend about $500,000-$2 million on market development * Over two-thirds of the company's wholesalers then carried no other brands
I think that Coors’ competitive advantage was established through a differentiation strategy, which was basically the main factor for its success. The company was using several combined factors from its different divisions; special spring water from Colorado, was aging its beers for 70 days with natural pasteurization instead of the industry average of 20 with additives. Over two third of the company’s wholesalers carried no other brands and the company was charging relatively higher price in the industry (the calculations are