Introduction
Coors Beer is a company operating since 1873 across the United States (“About Us,” n.d.). Coors’ policy has always emphasized the need to use the best procurement practices and brewing strategies that would help maintain the taste of the beer, which affected the distribution and production potential. Recently, the company decided to invest in the reduction of its distribution costs. This paper will analyze the Coors case study and discuss the alternative solutions to the issues that impact the performance of this business.
Diagnosis
This company is doing well since apart from the workers’ strikes and some conflicts with the labor union, Coors was able to upkeep its operations, introduce new beers to the market, and increase the area of distribution for its current products. In the case study, the company’s plans to build a second facility for beer production and a bottling facility are detailed. Notably, Coors distributed its beer both through wholesalers and through direct distribution.
However, there were restrictions regarding the number of states that the beer can be shipped to both due to costs and because of the company’s production policy. Moreover, according to the case study, in 1975, the company had extremely good sales in 10 out of 11 of its target states despite the general decline in consumption. Therefore, due to the fact that Coors was doing well in terms of sales, they needed to establish another factor, both to increase the geographical presence of their beers by distributing them to states that previously could not receive these beers and by increasing the production capacities,
However, when examining the logistics issue that Coors case study shows, it is evident that the company’s policy to avoid pasteurization affected its distribution potential. According to the case study, the policy of not pasteurizing beer was linked to the taste that was adversely affected by this process. However, the case study also noted that the consumers did not report a substantial difference when trying Coors’ beer and that of the competitors. Hence, the non-pasteurization policy may be a marketing or heritage practice that the Coors management decided to maintain, but it does not necessarily contribute to the businesses’ development.
Solution
An alternative solution would be to consider the development of a new taste of beer that is prepared using pasteurization. However, the shortcomings of the alternative are the potential effect on the taste and the marketing challenge since Coors has prided itself on the premium quality and taste of its beer. Still, with the growing consumer demand and considering the company’s limited growth when compared to Aunhauser-Bosch and Miller, as seen in Exhibit 7 of the case study, Coors had to come up with a strategy to increase production. Although establishing a factory would help increase production and increase the distribution capacity, Coors would still be unable to ship its beer to all states across the US, which is why this alternative is a better solution.
Coors choose a distribution policy that required the beer to be shipped in refrigerated rail cars. However, the added costs of this type of distribution were in balance with the decision not to pasteurize the beers. Still, this limited the ability of the company to distribute its products since their beer would spoil more quickly when compared to others, limiting the shelf life. A good solution to this practice would be to introduce a Coors beer that is pasteurized and begin the production on Coors’ new plant.
Traditionally, beer is distributed to the end consumer through wholesalers and retailers and sold either in the stored or bars. Coors also used this practice. However, as the case study noted, they used to have an advantage and exclusive contracts with distributors since their franchise was profitable. However, over time the majority of distributors decided to differentiate and work with multiple producers, which also points to the need to change strategies and approaches that Coors takes towards production and distribution of its beers.
Action
To implement the recommended solution, Coors would first need to integrate a separate production line into the project for its new facility. Moreover, the development of a pasteurized beer would require changes in agreement with the distributors and the need to find wholesalers in states where Coors was not available previously. However, this process should begin with sample tests and marketing assessments to determine if the solution would not harm Coors brand image. Additionally, the tasting tests should help determine if Coors’ consumers are capable of distinguishing between the pasteurized and non-pasteurized version of the beer, and if the perceived difference is minimal, the company can proceed with the production.
Evaluation
Notably, the introduction of a new kind of beer, especially considering Coors’ focus on not pasteurizing its products due to taste changes, would be a disruption both for the company’s policies and its brand image. However, as noted in the case study, the marketing studies showed that consumers did not distinguish between Coors’ beer and that of its premium competitors, with the only distinction being the light nature of the beer’s taste. Hence, although the alternative offered in this paper is a drastic change to the company’s brewing policies, it is possible that the consumer would not notice a difference in the taste.
Moreover, in terms of costs, as was mentioned in the case study, the use of refrigerators for distribution is about equal to that of pasteurization, which means that Coors would not encounter substantial cost issues. However, pasteurization would allow speed the production since the time needed to brew beer without this process is several times higher when compared to the time needed to produce pasteurized beer (“To Pasteurize Or Not To Pasteurize?”). Hence, Coors would receive an additional benefit of being able to produce more beer units per same period as its production facilities would not be occupied by the beer for as long as they are without pasteurization. Therefore, this solution offers benefits in terms of distribution, costs, and production capacity.
Conclusion
In summary, this case study details the plans of Coors’ brewery to expand its production facility to address the increasing demand for beer consumption and increase the geographical presence of its products. The alternative solution offered in this paper is changing the production line and integrating a Coors’ beer prepared using the process of pasteurization. This approach would help the beer producer address its distribution and production capacity issues. On the other hand, it does not appear that the consumers can distinguish the taste of Coors’ beer from that of the other brands, which means that this solution would not adversely affect the band.
Works Cited
“About us.” Molson Coors. Web.
“To Pasteurize Or Not To Pasteurize?” Lion Brewery. Web.