Coors is a family-owned beer brewing company that has been dominating the national beer market in the US since its inception in 1873. It experienced phenomenal growth during the 1970s when the baby boomers became of drinking age. Exhibit I enumerates this phenomenal growth over the time. However, during the period between 1975-1985, it experienced a drop in its market share and subsequently its profits. While the company only focused on producing a single type of beer, in the mid-1970s it came up with the plan to expand its production capacity. During this period, the beer making industry was experiencing very low growth rate as compared to other years and Coors was not saved for this effect. With its increased capacity, it could not cope with the lagging demand. Coors had a policy of making beer on demand rather than having it ready for times when more will be needed. It is demonstrated by an analyst who summarized it as, "We make a little beer, if we sell it, we make a little more." The company, therefore, had little backup stock when peak times arrived.
Another reason for its slowed growth during this period was its inability to meet the shortfalls its neighboring states were experiencing. While they could address the demands of states such as Texas and Missouri, they could not reach the East Coast market quite yet. Their geographical restrictive policies, which were cited in a lawsuit brought on by the FTC against the company. Other large companies such as Miller and Anheuser-Busch were able to clinch this market and offer the company stiff competition.
Coors has also been the target of multiple class lawsuits and strikes because of their stringent and possibly illegal operating practices. While it is not explicitly elaborated in the article, such actions and worker boycotts tend to cost a company as it tries to make up for the deficit.
The company thrives off of exclusivity, even in its distributors. In the 1970s, the company was so successful that they managed to have wholesale distributors who exclusively carried their brand. However, due to the typical market progression, it changed in the late 1970s and distributors now wished to sell more brands. Coors had not set systems in place to change with this new dynamic and thus suffered. By the 1980s, the number of wholesalers had fallen so low that the company had to give in to the distributors’ demands.
Finally, Coors is an exclusive brand that made a market for itself using only its name. Any strategy for improving their market share and profitability thus depended on word of mouth and its taste. However, with the advent of the technological era, more and more emphasis was being placed on the need for advertising into which the company had not looked. It suffered the consequences of their absence from television commercials as other brands did. They also lacked the ethnic minority market share because the older generation at the time did not invest in diversification programs, which were quite popular then.
For the company to improve its prospects, it must devise an inclusive plan to make sure it does not fail if it were expand and go national. Just as in the past, Coors beer is widely known for its distinctive light taste. In such a market where customers are constantly looking for exclusivity and to stand out, Coors provides this feeling. In their initial expansion plans, they were able to achieve more market by maintaining their taste even when they were introducing new brands within their company. In connection to this, the company should continue to invest in its marketing strategies. Their first advertisements in the mid-1980s, among the one that starred Mark Harmon proved profitable which consumers took as a proof exclusivity as the actor was considered to have excellent taste in beer. Advertising is of particular when looking to introduce new products and market penetration into new territories.
Another way to expand their profit in the future is to invest in the diversification of the entire company. The younger generation of the Coors has expressed their interest in making the company more diverse in a bid to improve its current market standing where its primary customers are the racial majority. It is also looking into tapping into ethnic minority employees. Diversification is a crucial tool in Corporate America as it gives the company the ability to tap into diverse human resource skills with innovative ideas on expansion plans.
The company also needs to invest in the market investigation to be aware of new market trends that could end up being the mainstay. The company did this by switching from manufacturing a single kind of beer to carrying multiple brands of the company. Consumers' tastes are always changing as time progress and for the company to maintain its profits and even grow them further, should tap into trends such as vegan beers. While they could end up driving production costs up, or down like the Coors Light did, they can capture and maintain such markets.
The company also needs also to invest in capacity production. Coors low production capacity in the 1970s had a deleterious effect on the company’s penetration market ability because they only produced as per the current market demands. It needs to be prepared for the inflating and deflating market demands to ensure its survival in the coming years. While the beer manufacturing industry is not subject to steep inflations, a shrinking economy can affect the market buying capacity.
Finally, judging from the success of Coors and its beer brands, the company could rip big from its countrywide expansion. Coors has long been associated with exclusivity and greatness owing to its massive exposure provided by high-profile celebrities and personalities. The company can exploit such nationwide appeal and reach all the fifty states of the country. In connection to this, the company needs to invest in point manufacturing sites so that it can reduce its productions costs as well as transport fees to serve these new markets.
Works cited
Adolph Coors in the Brewing Industry. Harvard Business School, 2016.
