In 1975, Coors Brewing Co. felt it was time to enlarge its footprint and start expanding. At this point in history, the last time Coors had expanded was in 1966 with their move into the remainder of north and west Texas, thus putting them in 10 states and half of Texas.
In some ways, Coors was not unlike today’s successful regional crafts. Yuengling, for example, with its current limited footprint, is interested in adding more states when possible. The main difference between Coors and these regional crafts is that Coors was the number one selling beer in all 10 states with huge market share, as much as more than 50% of market share in some cases. Given that success, Coors was in the market for stand-alone distributors who would be exclusive. In an effort to limit the size of these new distributors, Coors divided the territories thus creating four distributors in San Antonio and five in Houston.
Forty years ago Coors began awarding distributorships to former mayors, sports heroes, astronauts, and business people. There were a couple of operations awarded to former distributors who sold out their existing house, thus enabling them to attain a Coors operation. One of these was awarded to Charles M. Duke, Jr., an astronaut whose accomplishments included walking on the moon.
While running the operation for Charlie, the thought frequently crossed my mind as to why someone with his credentials: a fighter pilot, astronaut, and a man who walked on the moon, would ever want to be President of a small Coors operation. Running a beer distributorship in 1975 verses running one today is like night and day. A little over two years after opening his distributorship, Charlie sold out to the Azar family of El Paso.
Coors North East or The Orbit Corporation was profitable and had a market share of approximately 13% when Charlie sold out. This was far from the success Coors had in their older established markets. It was not long before all four distributorships consolidated into one operation. Even with the finalization of the consolidation the Coors brand sold many times in San Antonio through the ensuing years. It was only several years ago when Glazer’s ponied up a small fortune and bought the distributorship, now a MC house with many brands.
Recently, First Beverages Groups’ Townsend Ziebold stated that he believed there will be a little less than 25 craft transactions in the next eight months. He further stated that there are a number of reasons for this: high multiplies, declining margins due to flat pricing, more market investment push back from distributors, and Capex costs for expansion.
Perhaps for these craft brewers it was the challenge of building a brewery and once complete, the reality of the beer business set in. Just like all these small Coors houses, as in Charlie’s case, with good money sitting there, why continue on and fight the fight? All these Coors houses sold or consolidated with Schlitz/Miller/others over the past 40 years going from small operations to huge multi-million case houses worth hundreds of millions dollars.
Once these craft breweries sell out, it will be interesting to watch how they perform over the ensuing years, especially if the craft segment continues to grow. How much will their value increase? Time is the longest distance between two places….
Beer Fodder; http://www.forbes.com/sites/
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