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Molson Sells Coors Light in Costa Rica – Mulls Brewery

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Molson Coors Brewing Co., the biggest beer company based in North America, begins selling Coors Light in Costa Rica today and is considering adding a brewery in Latin America.

Costa Rica will bring to about 30 the number of countries, including Mexico and China, where Coors Light is sold. The Denver- and Montreal-based brewer is taking advantage of a growing trend toward light beer in countries that have leaned toward full-calorie brews traditionally, said Paul Mendieta, managing director for Mexico, the Caribbean and Central America.

The company may need to develop manufacturing in Latin America to accommodate growth of Coors Light, its best-selling brand, he said. Options may include building a brewery or cooperating with another brewer, according to Mendieta.

“As we continue to expand into new markets, it is definitely something that we plan on addressing,” Mendieta, 51, said in a Sept. 18 telephone interview. He declined to specify potential timing of such a move.

Brewing locally would cut freight charges, a “significant portion” of the cost of selling in the region, he said.

Molson Coors was unchanged at $48.10 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have lost 1.7 percent this year.

The challenge for Molson Coors is choosing markets without a dominant international competitor where consumers are already comfortable with the taste of light beers, said Erin Ashley Smith, an analyst with Argus Research in New York.

Market Challenge

“They don’t have as much international exposure as a number of beer companies they are competing with,” Smith said in an interview. “Long term, they are going to need to look outside the U.S. for some growth to be able to compete better.”

Overall beer sales by volume in Latin America surpassed those of North America in 2007 and will grow 20 percent by 2013, according to researcher Euromonitor International. The Coors brand, with almost 7 percent of Latin America’s import beer market in 2007, faces competition from Anheuser-Busch InBev NV’s labels.

Leuven, Belgium-based AB InBev’s Brahma and Budweiser brands together held 42 percent of the import market there, according to Euromonitor data.

Budweiser Expansion

“We are researching and carefully evaluating the best approach to expand Budweiser,” Marianne Amssoms, a company spokeswoman, said yesterday in an e-mail. “This is a mid- to long-term effort.”

Latin America’s growing middle class has brought a taste for light beer back from travels to the U.S., Mendieta said. Distributors in at least five South American countries have asked for Coors Light in recent months, Mendieta said.

Coors Light, known as the “silver bullet” because of its silver can, started selling in Puerto Rico about 15 years ago. It has since been exported to countries including Mexico, where sales grew from about 15,000 hectoliters in 2004 to 118,000 hectoliters last year, according to Molson Coors. North America and the U.K. are the brand’s largest markets.

Overall volume sales of imported lagers, which include U.S. light beers, grew 54 percent in Latin America in the six years ended 2008, while domestic lagers grew 34 percent, according to Euromonitor.

Light beer generally contains less alcohol and fewer calories than full-flavored beer. Coors Banquet has 5 percent alcohol and 142 calories per 12-ounce can, compared with Coors Light which has 4.2 percent alcohol and 102 calories.

Thermographic Ink

Coors Light is sold outside the U.S. as an import beer, fetching more per unit in China and parts of Europe, for example, than at home, Rob Borland, chief marketing officer for global brand and market development, said in June.

The brewer has marketed Coors Light overseas much as it has in the U.S. and Canada, using “Rocky Mountain Cold Refreshment” as its advertising tagline, Mendieta said. Printed in thermographic ink, mountains on the cans and bottle labels turn from white to blue when the package is chilled.

The company is curbing costs by translating existing advertising, instead of producing new ads. It introduced Coors Light’s “cold-activated can” in Mexico and Panama by re- editing a 30-second television commercial initially shown in North America, saving about $500,000, Mendieta said.

The packaging and advertising helped boost global Coors Light sales by 3.4 percent in the first half of this year as Molson Coors’s total beer volume fell 3 percent, the company said.

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Thursday, November 23, 12:51 pm

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