Molson Coors, number two in the Canadian beer market with a market share of 38% (2016), started construction of a new C$200-million brewery in Chilliwack, British Columbia, 100km west of Vancouver B.C. The new brewery is scheduled to open in 2019 and will employ 100 people.
The investment became necessary after Molson Coors closed a deal in early 2016 to sell for C$185 million its existing three-hectare brewery site in Vancouver to a developing company to transform one of the city’s last remaining industrial sites into a mixed-use residential neighbourhood. Production continues at the nearly 60 year old Vancouver brewery under a lease agreement until the new brewery is being constructed.
The new site is located in the heart of Fraser Valley hops country, where already man craft breweries are domiciled because of the mountain-fed water at the foot of the Cascade Mountains. The new brewery will also allow for a more flexible production not only of the existing products but also new products to come. "I think the most important thing for us is that we build a facility that supports the consumers' tastes of the future. Not just today," said Amy Michtich, chief supply chain officer for Molson Coors
Molson Coors like other big brewers is threatened by the growing number of craft breweries, eating into the market of the established companies. Federal statistics from 2015 show that conventional beer declined 3% since 2010 while craft beer sales have steadily risen, representing a year-over-year average growth of 17 per cent each year during the same period. 18.8% of all beer sold in British Columbia last year was already craft beer.
Not surprisingly, Molson Coors reported for its Canadian division in its Full Year Results 2016 a loss from continuing operations before income taxes of $460.9 million, compared to income of $48.5 million in the prior year, primarily driven by non-cash brand impairment charges of $495.2 million. Underlying EBITDA decreased 25.0% to $42.9 million in the first quarter 2017primarily due to higher cost of goods sold and commercial investments this year, partially offset by positive pricing and mix, as shown in The First Quarter Results 2017.
Molson Coors was in 2016 the world’s fifth largest brewer with a production of 95.2 million hectoliters behind market leaders AB InBev, Heineken, Carlsberg and China Resource Snow. After the mega-merger of AB InBev and SABMiller last year, rumors came up about the need for a further consolidation of the global brewing industries and a tie-up of the two family dominated breweries Heineken and Molson Coors (inside.beer, 6.2.2017).