Molson Coors forms Canadian import venture

By Neil Merrett

- Last updated on GMT

Related tags Molson coors North america Molson coors brewing company

Molson Coors and Mexican-based brewer Grupo Modelo have formed a
new joint venture to tap growing consumer appetite in Canada
for imported beer brands.

As of 1 January 2008, the companies, through the 50/50 joint venture Modelo Molson Imports, will ship, distribute and market the Mexican firm's products throughout the country in a bid to boost respective sales.

Such a move continues to reflect a growing consumer shift in the region towards imported beers to offset heightened cost pressures, highlighting growing export opportunities to both Canada and the US for brewers around the world.

Rodrigo Testas, director of Grupo Modelo in North America, said the move would strengthen the existing cooperation between the company and Molson Coors within Canada, the brewer's second largest export market.

"The joint venture will build on the existing successful arrangement through which Molson has already been importing, distributing and marketing Modelo brands in Ontario , Quebec and the Atlantic provinces ," he stated.

The Modelo Molson Imports venture will consist of six directors, who will jointly represent the interests of both parties involved in the agreement, and will be based in Toronto.

Robert Armstrong, former chief executive officer for Grupo Modelo's Canadian office, will take the helm of the joint venture.

Molson Coors US ambitions Molson Coors, formed in 2005, following the merger of Canada-based Molson and US counterpart Coors, continues to make a major push into the North America market for beer imports.

The brewer announced in October that it planned to combine operations with global rival SABMiller to operate in the US through a single entity called MillerCoors, which will have combined net sales of $6.6bn.

The company said the decision to enter into a joint venture with SABMiller highlighted the growing financial pressures facing brewers, both as a result of increasing commodity and materials prices and a competitive global beer market.

Both SABMiller and Molson Coors will hold equal voting rights in the partnership, though their economic interests will vary between 58 per cent and 32 per cent respectively, to reflect the individual value of the contributed assets.

Molson Coors vice chairman Pete Coors said the move was directly related to the challenge currently facing beer production within major North American beer markets, both from its rivals and in changing consumer demands towards premium and imported beer brands.

The US alone was found to be a particularly significant market for premium beer growth, with the segment accounting for 25 per cent of the country's beer sales volumes, according to consumer analyst Canadean.

Grupo Modelo's Mexican Corona brand currently dominates beer sales in the US, helping the product to become the world's third highest selling beer, the analyst added.

However, back in Corona's domestic Mexican market, the product is not viewed as a premium brand, according to Canadean.

The lack of recognition as a premium beer in the country may go some way to account for the attractiveness of export markets to Grupo Modelo.

Related topics Manufacturers Molson Coors

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