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Home / Business / Why did Molson Coors – a beer company that is one of Colorado's most iconic brands – relocate its headquarters to Chicago?

Why did Molson Coors – a beer company that is one of Colorado's most iconic brands – relocate its headquarters to Chicago?

Rooting a company nearly 150 years deep in a community is never easy, and Molson Coors Brewing Co.'s decision to relocate its headquarters from Denver to Chicago required much consideration.

“The leadership team and the board struggled about it and bothered. We looked at this in every way you could imagine, "said Adam Collins, communications manager for Molson Coors.

But in the end, an assessment dominated more than anyone else – marketing.

" Marketing was true reason, "said Matthew Hargarten, another spokesman for the company.

Not Dwarven's ability to market, but Molson Coor's ability to find and retain the marketing talent it needed to roll out a variety of new products designed to appeal to changing consumer preferences in a world of beer sales flattening.

Molson Coors said Wednesday it would close Denver headquarters, eliminate or relocate 300 jobs, which is part of a larger reduction of up to 500 jobs, expected to save the company $ 1

50 million a year.

That money will be used to fund product innovation and increase digital marketing.

But Colorado is not just losing high-paying jobs. n part of the state's corporate identity is being removed and its largest foothold in the consumer goods market has worn off.

"Coors has been the state's best-known, best-selling brand," said Tom Noel, a professor of history at the University of Colorado Denver. "It's been more than a beer – it's Colorado."

Colorado has long been proud to have one of the nation's deepest brewing pools, said Sam Bailey, vice president of economic development at Metro Denver Economic Development Corp.

Helen H. Richardson, The Denver Post

Brewing specialist Carl Kroeplin passes large copper brewing boilers while working at Coors Brewery October 30, 2019 in Golden.

Golden is home to the world's people. the second largest brewery, and Coors has brewed beer there since the Prussian immigrants Adolph Coors and Jacob Schueler launched the company in 1873.

Before it was a state of Colorado, it was Coor's beer.

Anheuser-Busch also operates a large brewery in Fort Collins. And when it comes to states with the most microbreweries, Colorado ranks second only to California, according to the US Census Bureau.

But with the demise of beer sales, Molson Coors Brewing needed to move in a different direction, reflected in the company's new name, Molson Coors Beverage Co. The company is increasingly branching out beyond beer, to things like boxed wine booze, hard coffee, CBD-infused drinks and non-alcoholic beverages.

“Our business is at an inflection point. We can continue on the path we have been going for years now, or we can make significant and difficult changes needed to get back on track, "President and CEO Gavin Hattersley said when announcing the consolidation on Wednesday.

Helen H. Richardson, The Denver Post

30 packages and 12 pack cases of Coors Light beer pass by on a canvas line at the canned line at Coors Brewery October 30, 2019 in Golden.

From manufacturer to marketer

So much as consumers might think their new favorite food or alcoholic beverage was invented by a creative genius in a test kitchen or brewery lab, that's not the reality of the mass market.

"People have a misimpression – marketing doesn't mean advertising. It means finding out what the market wants and what it will pay for, ”said John Lynch, senior associate dean of faculty and research at the University of Colorado Boulders Leeds School of Business.

The most important marketing department does is come up with new products, he said.

Chicago has a much deeper base of business marketing talent than Denver does, especially when it comes to consumer products, said John Boyd, an expert on site selection at the Boyd Company in Princeton, NJ [19659002] That's because it has a much larger presence of Fortune 500 companies than Denver, including giants such as McDonald's, Kraft Heinz and Mondelez International, the holding company for Nabisco, Oreo and Cadbury.

For people who want to move up the corporate ladder or want a place to land if things don't pan out, it's important to work where there is a large business cluster, he said.

Feeding that dominance is a bigger route for marketers. comes out of more prestigious business universities such as the University of Chicago and Northwestern.

And Chicago has several international flights, essential for a company selling across the globe.

"In the food and beverage industry, it's all about marketing. How do you connect with consumers?" Boyd said.

Still, what begs the question is, could Molson Coors have built a comparable or even better marketing team if it had chosen Denver over Chicago? Bailey and Lynch argue yes.

"It is true that there are more people in the Chicago area who have a marketing title than Denver," Lynch said. "But I don't think you're likely to find better talent in Chicago than in this area."

The University of Colorado Boulder has significantly increased its marketing program and produces high-caliber candidates, Lynch said, acknowledging that he is not an objective observer. .

The region has expertise in business marketing in technology and marketing for the natural food industry, which has a major hub in Boulder. And there is a lot of creative talent and a culture that promotes innovation, he said.

Bailey adds that VF Corporation, one of the nation's largest clothing manufacturers, is consolidating its scattered brands to a new Denver headquarters, which it would not have done if it was concerned about attracting market expertise.

"VF Corporation, which markets several iconic clothing brands, has moved its headquarters here," Bailey said. "We can be strong in marketing."

And Lynch said Denver could more easily attract the best promotions coming out of schools from across the country.

"People move here because they want to be in the area. This is an incredible city for millennia, while Chicago is not," he said.

Cities like Seattle, Denver, and Austin have been the best draws for young adults on the go this decade. By contrast, a University of Chicago study earlier this year found that one-third of young adults now living in Chicago want to leave.

This is not a sentiment. Chicago has lost its population for years. Metro Denver welcomes far more people from Cook County, where Chicago is located, than it ever sends back. The relationship is the most lopsided Denver has.

If the fundamental challenge Molson Coors faces is to remain relevant to millennials and their changing preferences, why create that strategy in a city they are fleeing to go with someone they consider alive? [19659002] Collins replies that the Chicago marketing team had success with its "Made to Chill" campaign under the leadership of new chief marketing officer Michelle St. Jacques, who joined the company in February.

St. Jaques came from Kraft Heinz and graduated from the University of Michigan, which has a top marketing program. This supports the argument about marketing synergies.

Sales of Coors Light are finally starting to resume during the new promotion. Miller Light sales continue to advance, and Blue Moon has had its best quarter for sales for many years, Collins said.

"You see some positive green shoots progressing with each of these brands," he said. "The company is aware that they will not interfere with the positive development of these brands."

Helen H. Richardson, The Denver Post

A canning specialist works along the canning and packaging line at Coors Brewery on October 30. 2019, in Golden.

No neutral reason

When Adolph Coors Co. and Molson Inc. merged in 2004, establishing the executive headquarters in Denver and Montreal. U.S. operations were centered on Golden and Canadian operations in Toronto.

Both families emphasized that the combination was an amalgamation of equal relationships. Chicago joined the mix in 2008 when Molson Coors formed a joint venture with SABMiller, based in London and Milwaukee.

The balancing act came back into play. Chicago offered a neutral location for the combination, and it didn't hurt that Illinois offered a $ 18 million incentive package.

Chicago has about 100 more employees than Denver, so the issue wasn't necessarily a dislocation. And if it was about social identity, Denver should have been the winning winner.

CEO preferences are sometimes at stake in headquarters relocations, and Denver still has a bitter taste of what happened to Chipotle Mexican Grill.

When Chipotle's board appointed Brian Niccol as CEO last March, he quickly announced that the Denver-based company would move to Newport Beach, one of the nation's most expensive real estate markets, located in California, a state that consistently ranks to have the most anti-business climate.

The Wall Street Journal reported that the Chipotle board had signed an agreement with the former CEO of Taco Bell to stay in his hometown and avoid messing up his wife and young children at the expense of disrupting the lives and careers of 399 people in Denver.

The argument Niccol offered was that the company needed to recruit expertise in the Southern California fast food industry when it reinvented itself.

Hat tersley, who took over as CEO of Molson Coors in late September from Mark Hunter, is a native of Zambia and rose through the SABMiller ranks. He has lived in Chicago for the past four years after becoming responsible for MillerCoors, which handled Molson Coors operations in the United States.

Before that, Hattersley spent three years in Denver as CFO of Molson Coors, so he knew the city. He is an avid sports fan, and he lists the Chicago and Milwaukee teams among the favorites, not anyone from Denver, according to a staff blog post.

"He loved Denver," said Hargarten, who dismisses suggestions that CEO preferences may be at stake.

Although Molson Coors acquired full ownership of the MillerCoors joint venture three years ago, jobs and power are concentrated in Milwaukee, a Miller town, and Chicago.

Leaders in Molson Coors, Colorado, could in theory have folded Chicago operations into Denver when they purchased full control of MillerCoors in 2016, saving the city the loss of its headquarters and saving on costs.

But it never happened. The acquisition moved the company's center of gravity from Denver to Chicago, which oversaw the US business and accounted for 70% of sales.

And Molson Coors stagnated financially after taking full control. Revenues went from $ 11 billion in 2017 to $ 10.5 billion last year. The $ 1.1 billion surplus is estimated at $ 953 million this year.

Investors have halved the company's stock price from the highs three years ago.

Helen H. Richardson, Denver Post

An employee walks past the main entrance of Coors Brewery October 30, 2019, in Golden.

Consolation Awards

Collins emphasizes that Colorado, with 2,000 Molson Coors workers after the consolidation, will remain the company's largest employment base.

In addition to the Golden Brewery, boxes of bottles and bottles, a company-owned distribution arm, and Blue Moon business in the River North area remain. These jobs are kept.

"We are proud of our heritage in Colorado and we are proud of our future in Colorado," he said.

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