With wine, liquor and small-batch “craft” beers snatching U.S. market share from mainstream brewers, Leo Kiely is in a tough spot. Yet the chief executive of Molson Coors Brewing Co. has managed to increase sales and profit by deploying simple marketing strategies and slashing costs.
Molson Coors, the third-largest U.S. brewer by sales, positions its flagship brand, Coors Light, as “the world’s most refreshing beer,” and touts the “smooth” taste of Keystone Light, its main discount brand. It also boasts a fast-growing craft-style beer of its own, Blue Moon. Now, the company is creating a new subsidiary, AC Golden Brewing Co., to develop other upscale beers, but at a deliberate pace so it can minimize risk.
Every move counts, because with only about 11 percent of the U.S. beer market, Molson Coors has fewer dollars to spend pitching its brands than larger rivals Anheuser-Busch Cos. and Miller Brewing Co.
Mr. Kiely, 60 years old, has boosted Molson Coors’s share price by 36 percent since the company was created by the 2005 merger of Colorado’s Adolph Coors Co. and Canada’s Molson Inc. In contrast, shares of Anheuser-Busch, which controls nearly half the U.S. beer market, are up 3 percent over the period. Mr. Kiely is on pace to wring about $180 million in cost savings from the merger. Still, Molson Coors faces challenges. It primarily operates in three mature beer markets, the U.S., Canada and the United Kingdom.
Mr. Kiely, who rides Harley-Davidson motorcycles through the Rocky Mountains on weekends, joined Coors in 1993 after stints at PepsiCo Inc.’s Frito-Lay and Procter & Gamble Co. In an interview at Molson Coors’s U.S. headquarters in Denver, he discussed topics ranging from how drinkers have changed to how he went about blending Molson with Coors. Excerpts:
WSJ: How have American beer tastes been changing?
Mr. Kiely: What’s probably changed the most in a generation is the variety-seeking nature of today’s beer drinker. I sort of grew up as a beer drinker in the late 1960s, early ’70s, and my brand set was an import, Heineken, and a domestic brand, Schlitz. Today I watch a beer drinker in his late 20s, and he’ll have an import brand, maybe two, he enjoys. He’ll have a craft-brew brand. And the bulk of his beer drinking will still be a light lager.
WSJ: Someone mentioned that you felt the craft-beer craze has been good for the beer business overall. Is that right?
Mr. Kiely: It goes back to consumers. If consumers are interested in beer, we’ll find our way to get our fair share. I think the craft brews bring a really important interest among beer drinkers in how beer’s made, why beer’s special. I am astounded with how curious consumers are about beer, the process of beer. And lots of guys like to try to make their own beer.
WSJ: What beers do you like these days?
Mr. Kiely: I have one of the great, enviable positions: Chief Beer Taster. In my fridge, I have Coors Light, Killian’s, Blue Moon and Molson Canadian (all Molson Coors products), and I probably got a Coors Banquet in there, too.
WSJ: What were your favorites before you joined the company?
Mr. Kiely: When I lived in Dallas in the 1980s, Coors Light became my favorite brand. It was the most popular beer in town. Prior to that, in Chicago, I was an Old Style drinker. It was the thing to do in Chicago.
WSJ: Your first job was mowing grass in a cemetery during high school. What did you learn from that?
Mr. Kiely: I worked with a bunch of career guys who did that for their whole life. And relating to them became an important thing to me. I enjoyed it, I liked them. I learned that you really need to value all kinds of people.
WSJ: What’s your management style?
Mr. Kiely: It really crystallizes in “people make it happen.” The job of a leader is to set the horizon—set a big, hairy, audacious goal. And then staff the company with leadership that will align against that. Turn the team loose and let them play. It’s all about talent. Somebody said, “People are your most important asset.” I would say, your best people are your most important asset, but you’re constantly looking to upgrade that talent pool.
WSJ: You came from outside the beer industry. What’s been the best place for you to find talent?
Mr. Kiely: By and large, even with all the people we’ve brought in from the outside, the best way to bring talent is through your own organization. One reason I’m real proud of my leadership team is that they’ve been big proponents of what we call a general-management development program—picking out a cadre of our best young leaders every year and really investing aggressively at helping them broaden their capabilities.
WSJ: Molson and Coors are two old companies with strong cultures. How did you approach folding them together?
Mr. Kiely: No. 1 is get people to work. Beer’s a local business. Investing in those local teams with the responsibility for their markets, and having them focus on the business while we did the transition stuff was really important. The functions that make and sell and ship beer were largely untouched in the merger, because our businesses by market didn’t have that much overlap. No. 2 was celebrating what we had in common. These are companies with great family heritage, and they’re companies that really have a lot of passion for beer.
WSJ: How are you positioning the company to succeed in the new environment?
Mr. Kiely: I think to be a successful global brewer today, you have to be really good at portfolio selling. Having a strong portfolio of local brands, augmented by a big potential global brand like Coors Light, is really the formula to success looking forward. We have a great brand in Coors Light. We’re on the verge of being a truly global brand. It’s grown virtually in every market; we’ve got it in right now. We aspire long term to be one of the premier global beer companies.
WSJ: Can beer start to take back market share from wine and spirits in the U.S.?
Mr. Kiely: I think beer is very viable when you head into the future. You look at it as the alcoholic beverage of moderation. Beer is growing like crazy in Russia right now, because they’re looking to be able to be more in control. I think these things go in very long cycles.
WSJ: Why does the company need a new subsidiary to develop high-end brews?
Mr. Kiely: We see enormous potential in beer, especially for strong brands. Historically, national brand launches in the U.S. have cost the major brewers millions of dollars and more than 95 percent of them fail. Pete Coors kept saying there had to be a better way to do this and so he came up with the concept for AC Golden Brewing. This gives us added flexibility and agility, and another way to get innovative ideas to market without redirecting critical resources from our core brands. We feel this gives us a real competitive advantage as a brand builder in the beer business. AC Golden will focus on patiently introducing a new brand and allowing it to grow over time. Look, we introduced Blue Moon 13 years ago and today it is one of the fastest growing craft-style beers. We like to call it our 13-year overnight success story.
WSJ: Would you consider an acquisition to get bigger globally?
Mr. Kiely: Sure. We expect the beer business to continue to consolidate. And one of the stated purposes of the merger was to be able to participate in that in the long haul. People say, “Well, what’s next?” What’s next is to be ready when the next opportunity comes up and to be running your core businesses well and have a global brand that builds your reputation. People look at Coors Light today and they’re very interested in having an American-style beer in their portfolio, and they know Coors Light is a very strong brand. We have a dialogue with many, many of the world’s brewers.
WSJ: There’s been a lot of speculation that Molson Coors might eventually be acquired by SABMiller PLC, whose U.S. arm has about twice your company’s market share. Can you address that?
Mr. Kiely: I learned a long time ago that speculating about any of the rumors that come up in the beer business is a fool’s errand.
WSJ: Do you think about business when you’re on your Harley?
Mr. Kiely: What’s great about bike riding is you forget about everything else. Because when you ride a bike, you’re paying attention. This is serious sport. It takes your mind to a different place. When you’re on a motorcycle, nobody can talk to you. Nobody can have a meeting with you.
