Molson Brewing Co. Strategy

Molson sales have risen in Canada while in the U.S. the company has seen its sales decline even at a time when other import brands such as Foster's continue to do well, a beer that Molson brews for the U.S. The restructuring with Miller Brewing has been viewed as necessary for allowing more parity in advertising because due to the previous structuring deal, Molson's failure was Foster's failure "Aussies are miffed that their brand cannot fully capitalize on the Australian for Beer campaign because the import agreement ties growth in Foster's budget to growth in Molson's. Thus, Foster's has been stuck at roughly $10 million in annual spending because Miller has been underspending on Molson until it comes up with an effective creative strategy" (Khermouch 5).

Other weaknesses exist at Molson Brewing besides its import agreement structure, declining sales in the U.S., and limited control over its own marketing and import direction. Further, many point to a Miller Brewing management mentality that refused to except the reality that Molson's declining sales and plant closings and lay-offs were a sign that the brand was in trouble. Production problems like can and bottle flaws have injured the company's relationship with wholesalers and others, but recently part of Molson's strategy has been to convince Miller executives that it is time for a change if Molson is to be salvaged.

These relationships in the U.S. are particularly important to Molson as it tries to research and develop methods of reversing declining sales in the U.S. despite the fact that imports have been steadily gaining in popularity with the U.S. market "The brewer of Molson Ice, Molson Canadian and Molson Golden has seen sales dip more than 30% from the 1994 peak of 26 million cases in the U.S.; last year's sales were 17 million cases, according to Impact. Imports have more than doubled in popularity, rising from a 4% share of the total beer market in the early 90s to a 9% share in 1999" (Chura 8). Molson has also put money and time into researching new product design and packaging they think will help kick-start stalled sales in the U.S. market. For example, the company has been selling Molson in the U.S. in green bottles for three decades. However, Molson experimented with changing the bottle to its native brown color in the U.S. market and that, coupled with a growing import market, has given Molson Canadian new life in the U.S. market "Molson Canadian in a brown bottle demonstrated double- and triple-digit growth in its three U.S. test markets. The company subsequently expanded its distribution of the brown-bottled version to all of its accounts throughout the United States" (Sherwood 8).

 

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