The chief executive and marketing director of Molson Coors talk to Lucy Handley about getting more people into beer, going global and keeping Carling at number one in the sales charts

Marketing the UK’s biggest lager brand to 18- to 34-year-old men through football, music and festivals may be a dream job for many marketers, but keeping Molson Coors brand Carling in the top spot is not an easy task. Beer consumption is declining in pubs, bars and at home, booze regulations are becoming tighter and alcohol misuse is an increasing problem, costing the NHS £2.7bn, according to a 2009 report.

Projected sales figures aren’t any brighter. There will be a 2.4% decline in UK sales of beer, cider and flavoured alcoholic drinks between 2008 and 2013, which is the biggest fall in Europe, according to Datamonitor.

Drinking habits are clearly changing dramatically. Those who are still drinking beer are increasingly cracking open a can in the comfort of their own home. Off-trade sales of all types of alcohol rose 2.6% between 2003 and 2008 and on-trade sales fell 2.7% in the same period, which requires Molson Coors to approach its marketing with a more FMCG-focused mindset to make its brands more attractive to the sofa drinkers.

In spite of this, Molson Coors – brewer or UK distributor of brands including Grolsch, Sol, Cobra and Singha, as well as Carling – wants to become the fourth largest brewer in the world by 2012. It is currently sixth, according to Bank of America Merill Lynch estimates, behind AB InBev, SABMiller, Heineken, Carlsberg and Asahi.

The brewer also wants to double its global net profit by the same year – a goal it set itself in 2009.

Molson Coors is certainly heading in the right direction – its second quarter results,announced in August, reveal the brewer made net profit of $234.5m (£148.2m), an increase of 14% from $205.4m (£129.8m) in the same period a year earlier. Its third quarter results are out on 5 November.

In the UK, chief executive Mark Hunter and marketing director Chris McDonough are responsible for helping Molson Coors deliver the growth it is aiming for.

McDonough, who took up his board-level position in April, says: “The great thing about this industry is there is a world of opportunity around brand building. We need to put brands back at the heart of the industry, and improve consumer engagement.”

McDonough has many years of experience of FMCG brands having joined Molson Coors from Müller Dairy and has also worked at Mars on pet care brands.

Employing someone with such an FMCG-heavy background indicates that the brewer really is committed to looking at its industry in a totally different way. Innovation is at the heart of the company’s new approach, McDonough claims. “We are reframing how we look at the industry from a much more positive mindset. We are focusing our thinking, allocation of resources and commercial investment on innovation, which will help us build a depth and breadth of portfolio next year,” he says.

To this end, the department is looking to recruit “around ten” marketers, including brand managers for Carling and Coors Light. McDonough is also in talks with Molson Coors’ agencies about whether there can be an evolution of the “British sociability” positioning for the Carling brand that has traditionally been marketed as a beer to be enjoyed among male best friends, who go out of their way for one another.

He explains: “At the moment Carling stands for British sociability. But every brand goes through an evolution stage and we are looking at how we broaden Carling’s appeal and consumer footprint while maintaining its number one status.”

The major push will start next August and while McDonough can’t confirm what format it will take, he says it will at least include TV advertising. “This will be a massive campaign that you have not seen run by a beer brand for a good decade. I can’t tell you what that news is yet but it will be big – I keep promising Mark that it will be big,” claims McDonough.

Hunter, formerly Molson Coors’ marketing director, has faith in his new recruit, breaking into a rare smile as he jokes: “Chris probably brings a lot more capability to the role than I delivered. But the business and the brewing industry has become a lot more brand literate over the past 20 years, and that requires more of a pure FMCG skill set. This is why we’ve built the team and why it is so important to have someone like Chris here.”

Molson and Coors merged in 2005 and Hunter has reshaped his team since taking over the UK chief executive role in 2007 from Denver-based global CEO Peter Swinburn, who he now reports to. He put together a new board about two and half years ago, which was made up of roughly half internal promotions and half externally hired people.

Hunter started his career at Bass Brewers 21 years ago, working his way up to being a board-level marketer. Coors then bought Bass, and in 2005 Hunter moved with it to Canada to run sales and marketing, before returning to Burton-on-Trent in the UK as chief executive.

He helped double Carling’s sales in the UK between 1997 and 2005 and is now working on getting Carling into more markets. This year it signed an agreement with Spanish brewer Mahou-San Miguel for it to distribute Carling in Spain, as it does with Carlsberg brands Tetley’s and Grimbergen.

Core markets for Molson Coors are Canada, the US, UK and Ireland. Russia, China, Vietnam and Europe are emerging markets and part of a plan to increase its footprint. Hunter explains: “Rather than get into 20 or 30 markets we have selected about six or seven that we think we can build scale in, and that is a focus for the international team. That needs to become a bigger part of our overall scale and profit.”

Closer to home, Molson Coors is hoping to make shopping for beer more fun and less of an experience based on searching out the best deals. “We want to put a bit of aspiration back into the category. If you treat it like a commodity it will become a commodity,” McDonough says, adding that a recent trial where the brewer redesigned the beer aisle increased footfall to the section.

“The beer section is a low relevance and low penetration aisle. For want of a better word, it can be described as a bit of a ghetto. We have to make that a much more engaging experience – that might be different pack sizes, formats and ways of delivery such as Carling home draught,” McDonough says.

Home draught was launched before the 2010 World Cup so that beer drinkers could pour pints at home, and it will be on sale again next year, along with another “pack innovation”.

The on-trade has also been focusing on adding a sense of occasion in venues in a bid to attract more people. Hunter says: “There are many examples where publicans and retailers are starting to adopt [a new focus] and have seen a difference in how they are perceived.” Last year, for example, the British Beer and Pub Association launched a campaign to get more live music into pubs.

The brewer is unsurprisingly looking at broadening its focus beyond the traditional young male beer drinker. “We have completely reframed the way we segment the market and the types of consumer beyond the ever-diminishing 18- to 34-year-olds market,” McDonough says.

This means more of a focus on women, a group that many brewers have tried to interest, including Carlsberg – which launched a lychee-flavoured beer called Eve this summer – and SABMiller, which added a fruit-flavoured beer range called Redd’s to its portfolio in 2008.

Molson Coors’ attempts to increase its sales to women include launching the Bittersweet Partnership two years ago, a website and forum where women discuss beer, and the testing of Blue Moon – a premium brand aimed at women and served with a slice of orange – in the UK. McDonough claims that sales of Blue Moon have been good and adds that it will be rolled out next year to upmarket outlets.

“There is a real opportunity to ‘premiumise’ this category and Blue Moon will allow us to do that,” McDonough says.

Last week, Molson Coors announced that VCCP had won the above-the-line account for Coors Light, another brand it wants to get women to drink. Hunter claims this shouldn’t be too difficult, given that it is the biggest American bottled beer brand in Ireland.

McDonough won’t be drawn on whether there will be a new product launched specifically for women, but says that there will be “two or three initiatives to broaden the appeal of our portfolio next year”, following research and insights gleaned over the past two years.

The company is also looking at the “grey” market, a large segment that could start at age 50, according to McDonough. He says: “They connect a lot more with wine than they do with beer, but many have all enjoyed beer in the past. So we are looking at how you can get a different product or brand expression that gets that part of the population to reconnect with beer,” he says.

Linking beer to food is another way in which the brewer wants to get more people drinking its brands, which it has successfully done with Cobra beer and curry. “We are thinking about building a portfolio of brands that can be drunk at different occasions. Cobra is fairly unisex in its consumption and has a connection with the fabric of our nation, as we are a curry-loving nation,” says McDonough. Molson Coors is also the distributor for Thailand’s Singha beer, which signed a deal to become the official beer partners of Manchester United in August.

As well as building sales of the beer brands under its control, Hunter has aspirations for the Molson Coors name to be more recognisable to the public, as well as its individual beers with which they are already familiar. “We are the UK’s second-largest brewer with the biggest beer brand [Carling], but certainly from an employment brand perspective we need to get a bit more cut-through,” he says.

But don’t expect to see it using corporate branding in its campaigns, in a similar way to Unilever, which started using its logo on advertising last year. “We don’t do that at the moment and we haven’t had a conversation as to whether that would make any difference,” Hunter says.

However, behaving more like an FMCG firm is what Hunter is committed to, in response to the shift towards drinking at home rather than in pubs. He hints that the brewer would like to be able to sell its products direct to consumers, in a similar vein to GlaxoSmithKline, which started selling via its gskdirect.co.uk website last month.

“I think every FMCG company is looking at direct selling, and the ones that have done it reasonably well so far take products that you probably can’t buy on the high street, so there is some sort of cachet associated with it,” Hunter says.

“If you just try and replicate a retailer then I’m not quite sure what the added value is. It is fraught with complexity [for us] because of licensing laws. You have to be very clear about who you could sell to. At the moment our choice is to go through pubs or retailers but who knows how that will change over time.”

And keeping their options open is something that Hunter and McDonough are advocating as they attempt to steer the brewer through a period of great change.

Marketer to marketer

Matthew Osmon, commercial director of FIBA (world governing body for basketball), asks: How do sports properties need to improve their offering to sponsors such as Molson Coors?

Mark Hunter (MH): Over the past 20 years, rights owners have started to recognise the need for a commercial conversation. That has become more important in the past three to five years because investment in sports sponsorship has started to flatten off. My advice would be to continue the improvement where the rights owner looks at what it has got to sell through the eyes of the potential investor and recognises the true value of what it is trying to sell.

There have been examples during renegotiations where we have done a lot of work looking at media value and delivery. A number emerges [from the rights owner] and you learn there isn’t any substance behind that number. We have a successful relationship with the Football League and that is why the Carling Cup has been around so long and why we have just re-signed.

Paul Duncanson, managing director at Creative Brief and previously marketing director at Sony PlayStation software and Carlton Home Entertainment, asks: How do you feel Grolsch can maintain its premium position without considerable, continuing investment in advertising?

Chris McDonough (CM): We are doing a big piece of work on Grolsch to see how can it really occupy that premium space. You can’t build emotional equity unless you communicate, so it is important that we get the basics right on Grolsch. Once we’ve got it right we have to activate a positioning that connects consumers with what the brand stands for.

Raoul Pinnell, chairman of Strategic Investment Partners and non-executive director at Bexley NHS Care Trust, asks: Several countries have banned alcohol advertising. To what extent has this led to a reduction in alcohol-related health problems?

MH: In France [where advertising alcohol is banned on TV and in the cinema] for example, there is a growing problem with teenage alcoholism, so I think people should question what does and doesn’t work.

Advertising is there to educate, inform, entertain and to persuade, so for people who are already consumers of alcohol it has a role. I don’t think we would be facing some of the challenges we have as a beer industry if advertising was having the effect that has been suggested.

CM: There is a danger that if you remove advertising, [alcohol] suddenly becomes an industry that is demonised and underground when it shouldn’t be.

Q&A: Mark Hunter and Chris McDonough on…

…Becoming a chief executive

MW: What advice do you have for marketers who aspire to become a chief executive?

Mark Hunter (MH): Marketers sometimes believe that marketing is an end in itself, as opposed to a means to an end. The successful marketers are people who see the skill of marketing in the context of the business agenda. They are able to demonstrate their ability to see marketing as one of the core central business drivers, not in isolation. The successful marketers who then “break out” – for want of a better description – really see marketing for what it is and have an ability to connect much more broadly across the organisation.

…Pricing

MW: Other businesses, such as Diageo, have suggested that all alcohol should be taxed per unit rather than by type of drink whether that be a beer, wine or spirit, as they are at the moment. What is your view?

MH: Beer generally is an over-taxed sector, and if you look at what is likely to happen in the next three years or so, then there is going to be a pretty draconian increase in the amount of excise. We are very much for a level playing field on similar drinks like beer and cider. Wine and spirits deliver higher alcohol levels in shorter measures and therefore should be differentiated when it comes to excise. Last year, our [UK and Ireland] business made just over £60m in operating profit, but we collected £600m of tax and excise. That gives you a sense of proportionality between the brand owners and where the government currently sits.

Relative to some of the challenges around responsible drinking, one of the opportunities for beer is for it to be celebrated as a low-alcohol long drink. And if you look at studies across the market, the way that beer is consumed is different relative to other alcoholic categories.

MW: What’s your view on having a minimum price that beer can be sold at in the off-trade?

MH: If you look at other developed markets, such as Canada, where social reference pricing is in place, an awful lot of the issues that we see in the UK don’t seem to appear in the Canadian market.

Rather than saying we think it’s a bad idea, we think there could be some possibilities, if the challenge around responsible drinking is as large as many of the commentators would have us believe. The Government has asked us to consider a ban on below-cost selling. That is a step towards minimum pricing, so it should be considered.

The debate is much broader than just price, that’s why [alcohol industry body] the Portman Group, [advertisers’ body] ISBA and the [Committee of Advertising Practice] CAP codes are so important. The legislative framework we have around alcohol communications is very tight. An awful lot of what happens in soap operas around alcohol you could never put in advertising, for example.

…Social media measurement

MW: You have run social media campaigns for Carling and Grolsch. How do you measure the impact of those campaigns?

Chris McDonough (CM): We currently measure our marketing investment in pockets, so we may do it by campaign or by bespoke activity. We’ll have econometric modelling against every element of the mix, of which social media is one, by December 2010.

One of those measures is buzz and how much noise it generates, [but we are looking at] whether we can put a bit more science around it. It is probably a 60:40 split between science to art, and we’ve got to respect that. If we can put a programme in place, we will.

You have to connect on multiple touchpoints, but the challenge is consistency so that your brand becomes displayed, referenced and talked about in a similar way. One of the big challenges is how we drive that consistency as we look at our media next year.