Molson Coors Partners CCU to Launch Beer Brands in Chile - Analyst Blog

Global brewer Molson Coors Brewing Company ( TAP ) has recently entered into a partnership with Chile-based brewer Compañía Cervecerías Unidas ( CCU ) to launch two iconic American beers in Chile.

Molson Coors will bring its popular Coors Light brand and the brewer's newest offering, Coors, to Chile. It will be available at supermarkets, convenience stores and on premise accounts throughout the country by early 2015. Both Coors Light and Coors will be available in 12-ounce bottles and both will be available for purchase from Jan 12, 2015, onwards. Coors Light will be available in 12-ounce cans as well.

The launch of Coors Light and Coors in the Chilean market is part of Molson Coors' brand expansion strategy. Through this partnership, Molson Coors will also be benefited from CCU's vast knowledge of the Chilean market and world class distribution system.

We note that Chile's premium beer market has been steadily growing since 2009. In fact, in 2014, sales of Premium International beer brands represented an estimated 19% of Chile's total beer industry, per sources. Thus, the introduction of two new premium beer brands will appeal to the growing number of Chilean import beer drinkers. It would also boost CCU's reputation as the distributor of highest quality products to Chile's consumers.

Despite macroeconomic headwinds, Molson Coors is one of the world's largest brewers in the U.S. and boasts a strong portfolio of well-established brands, including Coors Light, Molson Canadian, Carling and Staropramen, as well as craft and specialty beers like Blue Moon, Creemore Springs and Cobra. Through continuous innovation, the company has been able to grow its market share. The company also spends on marketing and advertising to increase brand awareness.

However, we note that Molson Coors has been posting negative beer volumes in the U.S. and Canada for quite some time due to weak consumer demand as a result of a difficult consumer spending environment. Molson Coors continues to expect weak demand in the coming quarters due to macroeconomic headwinds.

Amid the economic challenges, it is encouraging that the company is focusing on expanding its brands internationally and to a place like Chile where the demand for premium beer is growing. We expect the new partnership with CCU to strengthen the market share of the above-premium category of beers, and thus boost volumes. Molson Coors currently holds a Zacks Rank #3 (Hold).

Some better-ranked beverage companies include Boston Beer Co. Inc. ( SAM ) and Monster Beverage Corp. ( MNST ). While Boston Beer sports a Zacks Rank #1 (Strong Buy), Monster Beverage has a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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