In a bold step to compete against Anheuser-Busch (NYSE: BUD), Miller Brewing Co. and Molson Coors Brewing Co. (NYSE: TAP) are forming a joint venture in the United States which will give them a 29% U.S. market share and significant additional opportunities to compete against Anheuser-Busch's 49% U.S. market share. The new entity will be called MillerCoors and insiders report that the entire line of products from each company will still be manufactured.
The joint venture will allow MillerCoors to save $500 million over the next three years by leveraging economies of scale. Both companies share a variety of distribution points and brewing operations and employee roles can be consolidated in some areas, which will free up budget to invest in advertising and marketing MillerCoors brands to consumers and offering a diverse product line.
What do you think of the MillerCoors joint venture? It sounds like it makes sense and should be successful. The brands and their respective markets complement each other well. Should Anheuser-Busch be worried? Just recently, Molson Coors' Coors Lite brand stole sponsorship of NASCAR from Anheuser-Busch's Budweiser brand. A Budweiser spokesperson shrugged that off at the time. Now, it appears that MillerCoors could threaten Anheuser-Busch's stronghold in the U.S. market far beyond the NASCAR sponsorship.
Miller Lite and Coors light are competitors not complementary brands. Will be interesting to see if consumers of Coors remain loyal to their Rocky Mountain spring water when it comes from Trenton, Ohio and Ft. Worth, Texas among other locations.
Posted by: Anonymous | October 10, 2007 6:28 PM | Permalink to Comment