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Tuesday, August 11, 2009

Hey, Mister Kiely: which of your kids do you like best? Huh? Which one?

Interesting piece in Crain's Chicago Business this week on the struggle MillerCoors boss Leo Kiely is facing. There are a number of components, but the key factor, the big Wahooni, is this: how do you grow both Miller Lite and Coors Light, two beers that are obviously in direct competition with each other...and with the best-selling beer in America, Bud Light. How do you put together a business plan that keeps Coors Light chugging along (the brand grew 6% in the last 12 months, very impressive indeed) and also lights a fire of focus under the flailing Miller Lite (down 4% over the same period)?

This is exactly what I was talking about almost two years ago when I called an impending MillerCoors merger a shotgun wedding. This was a merger that simply had to take place; when you're at this level in a highly consolidated business -- as mainstream brewing certainly is -- the only way to survive is to be the biggest sumbitch in the jungle. SABMiller and Molson Coors weren't big enough alone -- amazing, but true -- to take on A-B, let alone the ABIB juggernaut that was starting to look ever more real at that point. They had to merge to have a hope of winning.

And that's the sad thing about what this business has become. It's not enough to do well any more. It's about the guys at the top winning. It's about the shareholders getting a big pay-out (and taking the money and buying more stocks in hope of hitting the jackpot again when some company gets gutted). The best thing I see about the current deep recession is that these damnable masters of the universe are no longer celebrities. I hope it lasts, and we make much of people who create something other than marketing campaigns and buy-out deals.


Spencer said...

My reaction upon looking at the MillerCoors website was this: I find it interesting that the page "Why MillerCoors" says nothing about the beers, it's all about the business.


Steven said...

"This is exactly what I was talking about almost two years ago when I called an impending MillerCoors merger a shotgun wedding."

My first thought was just that, isn't this the first thing we all thought back when this was pending?

Based on the stats (which is synonymous to why there's a lot of us looking for work right now), I'd say there are going to be some unhappy Miller Lite fans very soon. I can't wait to hear the wailing and gnashing of teeth on Milwaukee radio!

Anonymous said...

Its no different than what is going on at the wholesale level,business plan my ass who has the money to buy each other out,the last guy standing.Stop the competition in any market,also join forces and kick the piss out of the only other competitor in the market.Just look at the Phila market miller and coors is kicking Buds ass up and down the street,walk into any retail outlet and they are giving their beer away go figure..

Scoats said...

I still don't see the need for the merger. Combined they are STILL a distant number 2 to AB.

Maybe they need a new way of looking at success. How many companies has Yuengling had to merge with to compete with all those guys?

When it comes to business, I strongly believe combining two crappy businesses simply creates a much larger turd.

Steven said...

"How many companies has Yuengling had to merge with to compete with all those guys?"

I'm not sure where Yuengling stands in the sales stats, but as far as I understand - Miller & Coors had no other competition than A-B and each other, thus the reason for the merger to team up against the big boy.

Now, imagine if Sierra Nevada & Anchor teamed up to charge against the other micros? Nah -- don't imagine, it would never happen because all the micros are happy being friends. For the most part. ;-)

Anonymous said...

Hey Steven friends until one of the big boys they so look down there nose out bucks up and watch all the beer loving craft guys that own their own piece of the pie start yelling fire in the movies,can you say Red Hook

Steven said...

I can say Red Hook, and often do -- no matter who owns 30% of the "pie," it's still tasty now and again.

And it's funny that in all the years there has been a silent partner (A-B has no say in the brewing), there has never been any of the big dictatorial coup everyone frets about.

Anonymous said...

Yes we can all say Red Hook go into the market and try finding any in the Pennsylvanis market and if you do it taste like .....AB does not brew it but what good is having the beer in the market if they will not put it on the retail shelves and eventually on the supermarket displays and shelves in Pennsylvania.The Millercoors merger had to happen to compete just the way it will happen and is happening across the country at the wholesale level.

Lew Bryson said...

Steven happens to be in Chicago. And I see Redhook and Widmer beers on draft in PA fairly often.