"Indiana competes at the GABF in Denver
SABMiller and Molson Coors announced a merger of their U.S. operations on Oct. 9, just as industry leaders were heading to Denver for the Oct. 11-13 Great American Beer Festival (GABF), whose “official sponsors” include Miller, Coors Light and (still) industry leader Anheuser Busch (A-B).
Indianapolis-based Monarch Beverage Company is Indiana’s largest beer and wine distributor, with Miller and Coors products at the top of their sales. Their World Class division distributes premium imports and microbrewery products.
Phillip Terry, Monarch’s C.E.O., spoke with NUVO just prior to leaving for Denver.
“In terms of the consumer, [the merged company] will be a more effective competitor against a very dominant player [Anheuser Busch] who has 50% of the market. Even the merged company will have only 30%. Historically, the cost of beer has lagged behind the cost of general consumer products, and more competition could make the cost even lower.”
For distributors, dealing with one company rather than two does lower the overhead somewhat. According to Terry, savings at Monarch could be passed on to consumers via lower costs to retailers, and/or the extra cash could facilitate more civic work, one of Monarch’s priorities.
Mat Gerdenich, president of Cavalier Distributing, whose niche is marketing high-end craft beers, observed that the merger seems like a natural progression.
“Coors and Miller distribution in Indiana were practically together anyway. They cooperated to stop from being crushed by A-B … The consumer might see some offshoot brands from Miller and Coors go by the wayside. For me, the merger has less of an impact. The category of craft beers is just exploding. January through September 2007 we had a 56.9% growth in sales compared with the same time frame last year.
“Once people taste a good full flavored, full bodied beer they’ll keep trying other quality beers. The taste of consumers is moving toward quality craft brews.”
Miller and Coors are recognizing this trend among consumers.
In a news release, Leo Kiely, chief executive of Molson Coors, stated, “We’re seeing the declining per capita of beer consumption, increasing cost pressures, consolidation of distributors and retailers [along with] stiff competition from craft and import beer brands.”
Competing with each other seems less productive than joining forces against A-B. For example, March 28, 2006 Miller Brewing, which bought Jacob Leinenkugel Brewing Company in 1998, introduced Leinenkugel’s Sunset Wheat as a challenge to Coor’s Blue Moon Belgian Wit.
“That was good for Cavalier Distributing,” Gerdenich observed, adding, “Cavalier doesn’t have a budget for promotion for our 400 different craft brews, but the [Miller/Coors] buzz got people willing to try a microbrew. That increased Cavalier’s sales.”
Jim Zink, CEO of Zink Distributing, central Indiana’s exclusive distributor for Anheuser Busch, surmises “in the short term [the Miller/Coors merger] will cause a benefit for Anheuser Busch as consumers watch what is happening.”
Zink points out that SABMiller and Molson Coors “have two different cultures. Coors is a conservative culture; Miller’s is a European culture. How the new company treats the cultures, where they place their values, might impact consumers” whose allegiances might go along with political and social issues.