Adolph Coors Company

12th and Ford Streets
Golden, Colorado 80401
U.S.A.
(303) 279-6565

Public Company
Incorporated: June 12, 1913
Employees: 10,000
Sales: $1.315 billion
Market Value: $1.027 billion
Stock Index: NASDAQ

The Coors family has owned and operated this American brewery for more than 100 years, and Coors has the distinction of being the only family brewery to survive the amalgamation process of the 1960’s intact. Coors is also one of very few brewing companies in the enviable position of having never accumulated any long-term debt.

Adolph Herman Joseph Coors founded the business in 1873 after having come to America from Germany in 1868 and settling in Colorado. Coors formed a partnership with Jacob Schueler: Coors contributed $2,000 to the endeavor, while Schueler provided $18,000. In May of 1880 Coors bought out Schueler and, since that time, the Coors brewery of Golden, Colorado has remained within the family.

The Coors family seems always to have had the ability to brew beer that people enjoy. The fledgling brewery’s sales increased steadily. In 1887 the brewery sold 7,049 barrels of beer (31 gallons per barrel). Three years later that figure more than doubled, reaching 17,600 barrels. Over the years Adolph Coors slowly expanded his market. By the time he officially incorporated his brewery as the “Adolph Coors Brewing and Manufacturing Company,” Coors’ beer was being distributed throughout Colorado.

Even at this early point in the company’s history, the distinctive Coors philosophy was emerging. The main tenets of this philosophy have been followed by three successive generations of Coors beermakers, each generation further refining the knowledge inherited from the preceding generation. Adolph Herman Joseph Coors believed in sparing no effort or expense in producing the best beer possible. To this end, he believed that only Colorado spring water was good enough for his beer. He also commissioned farmers to grow the barley and hops that he needed for his brewing process. The second tenet of the philosophy was that his family always came first, without exception. The Coors family brewery has remained a tight-knit, protective and almost secretive enterprise. The last tenet is that “a good beer sells itself.” Until 1980 Coors spent substantially less on advertising than any other brewer.

Prohibition came early to Colorado. In 1916 the Colorado legislature passed a law banning the production and consumption of alcoholic beverages within the state. Obviously, Prohibition was detrimental to Adolph Coors’ brewery; however, some business historians would say the company was strengthened by it. During Prohibition the company’s name was changed to its present one, the “Adolph Coors Company.” This change in name reflected a change in Coors’ product line. From 1916 through 1933 the company produced “near beer,” with an alcohol content of less than 3%, and malted milk. In addition, it was during this time that Adolph Coors and his son, Adolph Jr., diversified the company, creating what was eventually to become a small-scale vertical monopoly: Coors owned all that it needed to produce its beer, from the oil wells that created the energy necessary to run the brewery to the farms that grew the ingredients, and from the bottling plant that made the containers to the trucks used for distribution. This expansion was financed entirely with family money.

The repeal of Prohibition did not result in a dramatic sales increase for Coors as it did for many other producers of alcoholic beverages. Instead, the Adolph Coors Company, now under the direction of Adolph Jr., expanded its market slowly. While breweries in the East and Midwest were aggressively competing with each other with advertising and sponsorship of sports events, trying anything to increase their market shares, Coors hardly advertised at all. In 1970 Coors spent 600 to 700 per barrel on advertising, while its competition spent as much as $3.50 per barrel. Only in the 1980’s has Coors changed its advertising policy.

If Coors growth and development in the decades following the repeal of Prohibition is unexciting compared to that of companies such as Anheuser-Busch and Miller, it remains impressive just the same. In 1933 Coors sold 123,000 barrels of beer. Just 30 years later that number had increased more than 20 times to 3.5 million barrels. Until 1959 Coors had never been among the top 15 brewers in the country. Sales of 1.649 million barrels in 1959 put Coors in 14th place. A year later, Coors reached llth place. By 1969, Coors had moved up to seventh place. In 1973, Coors position had peaked at number four. What makes such growth impressive is that Coors managed its climb to the top when “regional” breweries were being squeezed out of the market. In 1947 there were 450 independent breweries. By 1967 that number had dwindled to 120.

So how did Coors grow 1500% between 1947 and 1967, with only one product, made in a single brewery, and sold in only ten states? The quality of their product is certainly one reason for Coors’ success. Through the 1970’s Coors was the leading beer in nine of the 11 western states in which it was sold. In California, the second largest beer market in the country (New York is first), Coors at one time held an astonishing 43% of the market. Another reason is a unique marketing ploy that Coors perfected during the 1960’s. When Coors entered a new market, it would lead with draught beer only. The company would sell kegs to taverns and bars at a price under that of its lowest competition. Then Coors would encourage the barkeepers to sell the beer at a premium price. Once Coors’ premium image was established, the company would then introduce the beer in retail stores. Since Coors spent so little on advertising, the company was able to offer a better profit margin to its wholesalers. These profit incentives to both wholesalers and retailers worked well.

However, neither marketing nor product quality can account for what is now considered one of the strangest phenomena in American business history. Beginning in the late 1960’s and culminating in the mid-1970’s Coors developed, without any effort by the company, a mystique which made it “cult” beer. Limited availability created intense demand on the east coast. Westerners, keen to flaunt their perceived superiority to easterners, got caught up in a “we have what you want” syndrome and unwittingly became the company’s unpaid advertisers. As a result, Coors virtually eliminated its competition in nine western states. Those nine states provided Coors with all the market it needed to become the fourth largest brewery in America.

Even at the height of the company’s success in 1974, there were already signs of impending trouble. Since 1960, when Adolph III was kidnapped and murdered, the Coors have believed that they were the targets of radical terrorists. Over the years the family grew more insulated, cautious and secretive. They were highly careful in their hiring practices, utilizing polygraphs and sworn statements of loyalty. Outsiders saw these practices as both unfair and as a means of enforcing racial discrimination: the limited numbers of blacks and Hispanics employed by the company seemed to support this view. Lawsuits were filed alleging discrimination and, more importantly, a boycott was organized by a coalition of minority and interest groups filed lawsuits alleging discrimination and, more importantly, they organized a successful boycott. The boycott and lawsuits provoked more public scrutiny of the Coors dynasty. A series of articles appeared in the Washington Post in May of 1975 documenting Joe Coors’ political philosophy and activism. Not only did these revelations exacerbate the boycott, they also influenced the average consumer and generally undermined Coors’ market position.

At first, the Coors family response was retrenchment and litigation. However, when sales dropped 10% in California in 1975 (at the time that state accounted for 49% of total sales), the family changed their tactics. They settled the lawsuits, agreeing to a minority hiring plan. They began advertising campaigns aimed at showing the company’s “good side.” Television advertisements revealed a rainbow of minorities working happily in the brewery. Bill Coors took the initiative on environmental issues and proclaimed that Coors was well ahead of the industry and the government in keeping the environment clean. The replacement of pull-tabs with “pop-down” tabs and the first aluminum recycling program were cited as proof of Coors’ commitment.

After a decrease in sales through the late 1970’s, the company appeared to revive in 1980. Barrel sales dropped by one million between 1976 and 1978, bottoming out at 12.5 million before rebounding in 1980 to 13.7 million, 200,000 barrels ahead of 1976. Bill and Joe Coors, the third generation of the family and now in charge, concluded that their sales problem resulted from their image problem and that they had successfully solved both.

Two separate situations, one in 1975 and the other in 1976, should have signaled that the company’s problems went beyond that of image. In 1975 the Coors family, for the first time, was forced to offer shares to the public to raise $50 million to pay inheritance tax for a family member. The original offering was successful, raising over $130 million. The stock sold was of a non-voting variety, so the family did not relinquish any control over the company. It was remarked by analysts at the time that the reluctance with which the company undertook the offering disclosed a disdain for modern methods of capitalization. The second situation involved a Federal Trade Commission (FTC) ruling, later upheld by the Supreme Court, striking down Coors’ strongarm tactics over distribution. Coors refused to sell its product to distributors that the company regarded as unable to handle the beer properly. Once again, many industry analysts remarked that the company exhibited a disdain for mass marketing techniques.

With Anheuser-Busch and Miller growing rapidly, Coors believed that it should continue to do that which made the company successful in the first place, produce a beer superior in quality and present it to the consumer with a low-key approach. The two larger companies were spending billions of dollars on promotion in a market which they continually expanded with new products. In 1982 Coors sales dropped under 12 million barrels for the first time in 10 years.

Bill and Joe Coors had run the family business for 20 years, sharing the credit for the company’s success and the blame for its reverses. Joe was better known for his politics than his business accomplishments, even though he directed Coors’ most successful subsidiary. As president of Coors Porcelain Company he created a profitable high technology operation which, among other endeavors, supplied material for the National Aeronautics and Space Administration (NASA) space shuttle project.

In 1986 Jeffrey and Peter Coors, Joe’s sons, took over the top positions in the company. Having worked their way up through various aspects of the business, they are responsible for Coors’ success since 1983. More open to modern business strategies, they have experimented successfully in expanding Coors’ product line. “Coors Light,” introduced in 1978, was the second best selling beer in its category in 1986 (behind “Miller Lite”). Other new products include “Herman Joseph’s 1868,” “George Killians’ Irish Red,” and “Coors Extra Gold.” Coors’ distribution, which expanded slowly through the 1970’s, was officially “nationwide” for the first time in 1986. Also in 1986 Coors opened a huge distribution center in Elkton, Virginia which now receives refrigerated shipments by train directly from Golden, Colorado. Future plans call for a second brewery at this site. Perhaps the place where the recent change in leadership has been felt the most is in market research and advertising. The Coors brothers have, for the first time, hired top level professionals to manage Coors’ marketing strategy.

Principal Subsidiaries

Advantage Health Systems; Coors Biotech Products Co.; Coors Ceramics; Coors Distributing Co.; Coors Energy Co.; Coors Food Products Co.; Coors Packaging Co.; Coors Transportation Co.; Golden Recycle Co.; Rocky Mountain Water Co.