October 22, 2019
October 22, 2019
Looking at the panoramic view from the 46th story offices of Molson Coors in Denver, Colorado, one can only imagine how different the same scene must have been in 1873 when Adolph Coors founded the Golden Brewery in nearby Golden, Colorado. Years earlier in Canada, John Molson had opened a brewery in Montreal, Canada. Through a series of corporate acquisitions that began in 2005 with a “merger of equals” between the two companies, the Molson and Coors families have emerged united to form one of the world’s largest and most successful public beverage companies.
Recently retired CEO Mark Hunter and fifth-generation member of the Coors family, David Coors, spoke at an NACD Colorado event. Led by moderator Teresa Van De Bogart, they delved into the details of the company’s business.
Molson Coors is a public company with dual-class shares, with over 90 percent of the Class A stock owned by the families. A board of 14 consists of four family members, nine independent directors, and the CEO. The Molson family proposes three independent directors; the Coors family likewise proposes three; and three are Class B directors. All committees except the nominating committee are led by independent directors, while the chairmanship and vice chairmanship of the board alternate between the Coors and Molson families every second year.
When asked about the operations of the board, Hunter said, “The CEO’s role is to engage with the Class B shareholders, and make sure the families and independent directors are aligned on strategy.” The company uses a rolling three-year strategic plan. Hunter subscribes to the “make sure there are no surprises” philosophy of working with the board. He added light heartedly that he strives not to “fall out with anybody.”
With nearly 18,000 employees, $10.8 billion in revenue, a $2.45 billion underlying EBIDTA, and 4.6 billion pints of beer sold around the world each year, Molson Coors is big business. According to David Coors, whose great uncle invented the aluminum can for the company, times have changed since the company was in the hands of previous generations. “Business and society are evolving at a pace never seen before,” he said.
Hunter, who has been in the beer business for more than 36 years, agreed. “In the last 10 years, there has been a dramatic change.” He referenced the growth and speed of data at the retailer level, as customers leverage Molson Coors to drive category growth and increase profits per square foot. At the same time, “Consumer word of mouth is instant.”
The market for beer is also changing. “Consumers are trading up in price and flavor complexity, drinking fewer beers per occasion,” said Hunter. “Consumers are also broadening across categories.” He added that consumers are more carbohydrate and calorie conscious. Many are now willing to buy pricey cocktails and, overall, developed markets are drinking less.
To keep up with changing consumer demand, Molson Coors focuses on innovation. The company is experimenting with low-calorie flavored malt beverages, wine spritzers, alcohol-free beer (a booming segment), cannabis infused beverages (in Canada only), hard ciders, craft beers, and more. Coors, who leads some of the company’s innovation efforts, including a line of craft beers brewed in Colorado using only Colorado ingredients that attendees were invited to sample, noted that “micro-competition” is also a challenge. To address the competitive marketplace, his group gains consumer insights, creates and brands the product, and speeds to market.
Hunter added that to innovate and test rapidly across the business portfolio, the company also uses third parties to do small tests in the U.S. and U.K. If they work, “we launch them at scale.”
One frustration for Molson Coors is that, while its business fundamentals are strong, it has a relatively low overall valuation relative to its revenue. “No excuses,” said Hunter. “To get the valuations, we have to demonstrate topline growth, which can be challenging for established CPG [consumer packaged goods] companies.”
Throughout the discussion, the company’s focus on culture was evident, as Hunter shared the company’s “Leading from Purpose to Performance” framework. According to Hunter, the organization plays to win, but only by doing it the “right way”: taking smart risks, keeping the team first, and delivering. As the former CEO, Hunter shared his own personal leadership model, one in which he seeks to excel in leading himself first, then leading others and the business.
He also shared the company’s concerted efforts to reduce the company’s “beerprint,” including its environmental footprint, minimizing water use and waste from its operations; its work to prevent misuse of alcohol; and its focus on making Molson Coors a great place to work.
Now that Hunter has passed the CEO baton to his successor, he looks forward to time with his own family. As for Coors, he will continue to represent the family legacy, many generations strong. “It is a blessing to be part of this family…. Beer is an emotional product. Your choice reflects on you as a person.” He reflected with humility, “It is remarkable that our product is in so many people’s hands.”
NACD Colorado wishes to thank the speakers for their preparation, participation, hospitality, and insights, and the Molson Coors team for hosting the event.