Coors Case Questions
Adolf Coors Case Questions
1. Why did the U.S. brewing industry consolidate?
The U.S. brewing industry consolidated because of declining beer prices but increasing input costs, differentiation, and intensified advertising. The larger brewers could withstand the pressure of declining beer prices as the demand grew with increasing input costs by expanding distribution and thus, their market. They also opened new distribution centers to lower transportation costs. The larger brewers also began differentiating by advertising, segmentation, and packaging. After the war, with the emergence of the TV, advertising intensified (pg. 4). By segmenting, larger brewers were able to categorize their beers into popular beers – sold primarily on basis of price- and premium beers – sold primarily on basis of image (pg. 5). Brewers also began introducing new brands, like light beer, and a super-premium beer. “The larger brewers had a greater advantage in introducing new brands because their existing brand names provided leverage, they could afford the introduction costs, and they had superior production and distribution capabilities which quickly ramped up sales of the new brands” (pg. 5). Finally, packaging differentiated the larger brewers, further consolidating the market. Packaging changed from a typical 12-ounce container to a variety of 7, 8, 10, 12, 14, 16, 24, and 32 ounce containers available in packs of 6, 8, 12, or 24 (pg. 5). The smaller brewers were not able to perform as exceptionally as the larger brewers due to this intensified market and therefore, only about 6 brewers were able to resist consolidation (pg. 5).
2. Coors was very successful through the mid-1970s. What was its strategy historically? Coors’ strategy before the mid-1970s was rapid expansion by appointing independent wholesalers and thus creating a larger distribution area. Yet, Coors made a strategic decision to keep operations in its Colorado facility. Consequently, Coors expanded first
1. Why did the U.S. brewing industry consolidate?
The U.S. brewing industry consolidated because of declining beer prices but increasing input costs, differentiation, and intensified advertising. The larger brewers could withstand the pressure of declining beer prices as the demand grew with increasing input costs by expanding distribution and thus, their market. They also opened new distribution centers to lower transportation costs. The larger brewers also began differentiating by advertising, segmentation, and packaging. After the war, with the emergence of the TV, advertising intensified (pg. 4). By segmenting, larger brewers were able to categorize their beers into popular beers – sold primarily on basis of price- and premium beers – sold primarily on basis of image (pg. 5). Brewers also began introducing new brands, like light beer, and a super-premium beer. “The larger brewers had a greater advantage in introducing new brands because their existing brand names provided leverage, they could afford the introduction costs, and they had superior production and distribution capabilities which quickly ramped up sales of the new brands” (pg. 5). Finally, packaging differentiated the larger brewers, further consolidating the market. Packaging changed from a typical 12-ounce container to a variety of 7, 8, 10, 12, 14, 16, 24, and 32 ounce containers available in packs of 6, 8, 12, or 24 (pg. 5). The smaller brewers were not able to perform as exceptionally as the larger brewers due to this intensified market and therefore, only about 6 brewers were able to resist consolidation (pg. 5).
2. Coors was very successful through the mid-1970s. What was its strategy historically? Coors’ strategy before the mid-1970s was rapid expansion by appointing independent wholesalers and thus creating a larger distribution area. Yet, Coors made a strategic decision to keep operations in its Colorado facility. Consequently, Coors expanded first