Molson regains U.S. marketing

Molson Breweries is taking back control of its brands in the U.S., vowing to re-establish the market share that Miller Brewing lost during its stewardship of the Canadian brewer's beers....

Molson Breweries is taking back control of its brands in the U.S., vowing to re-establish the market share that Miller Brewing lost during its stewardship of the Canadian brewer’s beers.

Since 1993, Molson’s brands have been sold in the U.S. by the Molson USA Partnership, a joint venture between the Canadian brewer, the Miller Brewing Company, and the Foster’s Brewing group. With Miller, which holds a majority stake, in charge of marketing, the brands have seen their sales volume decline by 35% over the last five years.

‘Under anyone’s guidance, that’s unacceptable performance,’ says Blair Shier, president of Molson’s U.S. operation. Making that decline even harder to swallow, the imported beer segment in the U.S. has been growing by 11% annually over the same period, and Foster’s, which was also handled by Miller in the U.S., has enjoyed a 60% growth in volume.

Under the agreement, announced Oct. 11, Molson will regain control of its brands by year-end, in exchange for $133 million. It will also see Molson brew Foster’s Lager for export to the U.S., while giving the Australian brewer Molson’s stake in the three companies’ joint U.S. distribution venture.

A press release issued by the Australian brewer says the Canadian marketing spend on Foster’s would increase five-fold, but Michael Downey, Molson’s senior vice-president in charge of marketing, says that’s not accurate. (He declined to say whether the figure is high or low).

Although it has severed its ties with Miller in the U.S., Molson doesn’t plan to go solo in that market, and is expected to announce a new partner next month.

Molson entered the U.S. market in 1971 with Molson Golden, and currently commands a 5% share of the import category, with the bulk of sales coming from the Golden, Ice and Canadian brands, says Shier. The top priority, he says, will be shoring up sales along the border, where sales volume is driven primarily by spillover advertising.

Taking back control is good strategy with ‘potentially huge’ benefits for Molson, says David Hartley, a beer analyst with Toronto-based First Associates Investments. ‘The opportunity to get that volume back is real, right out of the chute,’ he says.

Although Molson plans to dramatically increase its marketing presence in the U.S., no agency has been assigned the work, and Shier wouldn’t say whether it will go to an agency on its Canadian roster or will be assigned through a review.

Hartley believes there is also potential for growth on the Foster’s front in Canada. Although budgets and strategy are jointly controlled by Molson and Foster’s in Canada, marketing on the brand will be led by Anne-Marie Halpin, Molson’s vice-president of licensed brands. Ad creative will be picked up from other countries in order to maximize the reach for every dollar spent, says Downey.

‘We’ll use international creative, unless both ourselves and Foster’s deem that it’s not appropriate for the Canadian market,’ he says. ‘And quite frankly, that’s unlikely.’