COORS BREWING COMPANY

PROBLEM STATEMENT: Should Coors Brewing Company (CBC) enter bottled water industry by launching Rocky Mountain Spring water? Also conduct industry and market analysis, identify any major concern and design strategies to achieve the objective of increasing 50% revenue of the Co. in 5 years.

ANALYSIS: CBC wants to increase 50% revenue by entering bottled water industry.

LAST YEAR REVENUE: $5.2 billion

AIM: 5-year aim to reach revenue to $7.8 billion, Need to raise $2.6 billion in 5 years. Coors wants to own 10 % of the market share of the water industry.

DATA:

  • Last year, bottled water industry revenue = $11 billion
  • Flat water = 96%,
  • 3 major players = Coke, Pepsi, Nestle. (constitute 60% of overall water market)
  • Regional players (private labels) = 36% of market
  • Sparkling water = 4% (4 brands)
FORECAST: 5% increase each year for next 5 years.

WATER BRANDS

Premium

 

Mid-level

Coke, Pepsi, Nestle (Coors want to enter this market)

Lower tier

Regional waters

Q. What % of the bottled water market should Coors need to get in order to reach the goal of $2.6 billion? 

A. MARKET

5% increase each year for next 5 years, hence 5*5 = 25% in =5 years

Taking compounding into consideration it will be 25% < x < 30%, Lets assume 28%

= $11 billion * 1.28 = $14.08 billion = $14 billion

B. COORS

Coors wants to own 10 % of the market share of the water industry.

10% of $14 billion = $1.4 billion

20% of $14 billion = $2.8 billion

18% $14 billion = $2.6 billion

It’s really difficult to achieve 18% of the market share in 5 years, 10% sounds fine.

EASIEST WAY TO ACHEIVE THE SAME 

  • by acquiring a lower tier company named Bulldog Water (increased market share, expertise, Access to distribution channels [Piggyback]
  • Name the water with a different brand name, as no one would want to purchase water similar to a beer brand.
  • A different distribution network has to be introduced separate from the beer brand.
  • Competitors will react accordingly and will try to sabotage the new brand to retain its existing market share.

How to fulfill the shortage of 8% ($1.2 billion dollars)?

  • Increase product mix, Add flavored water.
  • Introduce Lemonade, iced tea, green tea, sports drink.
  • Launch of other alcohol products
  • Increased beer sales

Final Analysis: We enter the water market. Because:

  • The bottled water market will continue to grow 5% a year while beer sales will most likely remain sluggish.
  • We will introduce the water under a new brand-name Rocky Mountain spring.
  • One biggest risk is that we might not reach 10% market share because of competitive response and association with the beer company.
  • In the short-term we acquire ‘bulldog water’ (regional water brand) for its market share, expertise, and distribution channels.
  • We will build a new network of distributors for the sale of bottled water.
  • In the long run we will introduce additional products to the mix such as lemonade and iced tea for both Bulldog Water & Rocky Mountain spring.


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