Understanding Coors Profitability over the Years.

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To: Prof. Jay Dial

From: Gautam Kashyap,

Date: December 16, 2007


Re: Adolph Coors in brewing industry

Understanding Coors profitability over the years.

1. What were the resources and capabilities that contributed to Coors’ profitability in the 1970s? Did they have a sustainable competitive advantage?

Ever since Adolph Coors trekked into Golden, Colorado and discovered the local Rocky Mountain water, Coors (Est. 1873) has maintained a strategic positioning of quality and self reliance. In its endeavor it has a ever since maintained perfect strategic-fit in all of its activities. It means it has deliberately chosen different set of activities to deliver a unique mix of value.

The following activities illustrate the above:-

1. Activities defining quality:-

Fresh, pure rocky mountain spring water defined quality and consistent with its positioning strategy Coors acquired 60 springs as a source for its brewery.

Special emphasis was given to make its own malt out of proprietary strains of Moravian barley.

Its superior quality involved to unique aspects in brewing process-

* Coors aged its beer for 70 days compared to an average of 20-30 days for other brewers. This helped for natural fermentation and minimized the use of additives.

* Coors did not pasteurize the beer and to check bacterial contamination it brew its beer aseptically and stored in refrigerated warehouses.

The company’s shipped its beer in refrigerated rail cars and refrigerated trucks. It also warranted the wholesaler to destroy the inventory if it lasted for more than 60 days as a part of freshness policy.

2. Activities defining self reliance

Coors continued to acquire water rights and added reservoir capacity as a hedge against drought.

A long term contract with 2000 farmers was drawn to procure its own malt. It also operated its own rice processing facilities to protect...