Miller+Coors=More of the same?

Week 2 of the [Edited to reflect the point of order Stonch makes below: U.S. operations] merger between Molson Coors and SABMiller — both themselves the results of mergers and acquisitions — and you probably just want to know if this is going to make it harder or easier to buy your favorite beer.

Which, by the way, is no brewed by either.

Yes. Do a Google news search and you’ll find a thousand stories (really a few stories repeated hundreds of times), but they’ll explain the importance of this to wholesalers, stock holders and a variety of other interested parties. Some predictions will be right and others wrong.

But here’s something else from the press release:

Capturing Synergies and Improving Productivity
The combination of the businesses is expected to result in identified annual cost synergies of $500 million, to come from optimization of production over the existing brewery network, reduced shipping distances, economies of scale in brewery operations and the elimination of duplication in corporate and marketing services.

Does that sound to you like some Miller might be brewed in a Coors brewery and Coors’ products (Blue Moon even?) in Miller plants?

This is not a matter if they can do it well — Miller has brewed Samuel Adams products, for instance. It’s a matter of brewing a beer that comes from a particular place.

And that’s not a part of the the MillerCoors business plan.

Added later in the day: A great suggestion from Maureen Ogle.

Added 10.19.07: Garrett Oliver contributes to the New York Times Op-Ed page. “MillerCoors is not a threat to craft brewers but a warning: we should not walk the road of overexpansion or be tempted by the lowest common denominator of the mass market.”

Added 10.19.17: Boomberg.com reports the deal will lift sales of Miller Chill. I don’t know about you, but this gets me pretty excited.

9 thoughts on “Miller+Coors=More of the same?”

  1. “It’s a matter of brewing a beer that comes from a particular place.”

    And I wonder where Pilsner Urquell (SABMiller) falls into that plan…?

  5. “Week 2 of the merger between Molson Coors and SABMiller”

    Molson Coors and SAB Miller haven’t merged. They are still two separate entities, one a US-Canadian company and the other British. They’ve just set up a joint venture in one country and one country only (the USA).

  7. I think Stonch’s point is valid. There is a difference between a JOA and a merger, although it is more relevant on an business and international level. My question was really about US beer, and the importance of place.

    But to another point. This blog is US-centric – no surprise, this is where I live – and we should remember that we are not the center of the beer universe. There is none. Despite the efforts of mega-brewers beer can still be a local product.

    I was reminded of the US-centric part when a comment today pointed out that Doemens Academy has had a beer sommelier school for four years.

  8. I’ll just quote from my own blog post rather than retype it. Essentially, I agree totally with Stan’s comment about brewing from a particular place. More (and unneccesarily) loquaciously:

    In ten years, Miller and Coors have given back 5% of the market. So the little fish keep eating up even littler fish, but counterintuitively, they shrink. Not only do they not gain market share by picking up the small brands, but they actually lose ground over time.

    Here’s what the brewing companies seem to miss: beer is a local product. With consolidation, the little local brewers get sucked up into a corporate borg and brewing is shifted hundreds of miles away–the beers change, they’re no longer local, and the market dries up. Who cares about Henry’s if it’s brewed in California–it’s just a label on a beer can at that point. Many of the brands will die a slow death, perhaps even Coors, which may no longer be made with “Rocky Mountain spring water.”

    Here’s an early prediction: in ten years, SABMillerMolsonCoors will have reduced the number of brands in their portfolios substantially and will command less than 20% of the market. Of course, they’re unlikely to make it ten years before further consolidation happens. Which will be greeted, as always, as a shrewd business move by Wall Street.

  9. As we all know there were thousands (I’ve seen different numbers and it’s not clear if we might be talking 2,800 or 4,000, but a lot) of breweries in the 1870s, many of them making ales. Most hyper local.

    During the next 100 years most disappeared, as fewer and fewer brewed for a regional market and fewer still for a local market. What I’ve never seen, and have been led to believe doesn’t exist, is what brewers were thinking when they abandoned ales, when they gave up on the local market. This includes both breweries that folded their tents and those that kept brewing.

    What lessons could they have taught today’s consolidators?

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