A Warning from Molson Coors to Brazil: Make Money or Else

In a recent meeting of its board of directors, Canada-based Molson Coors Brewing Company reviewed its Brazilian business unit, Cervejarias Kaiser. As a result, the company is announcing a change in approach with respect to its operations in Brazil.

Molson Coors says that continues to believe that Brazil is a valuable beer market with potential for long-term growth. From a strategic standpoint, Molson Coors wants to participate in this market with the Kaiser brand and possibly with its flagship Coors Light brand.


“While we have a strong and energized Brazilian team in place that’s eager to win, and making solid progress month to month, we are unwilling to make further cash investments in Kaiser without greater certainty that it is a viable, long-term platform to compete effectively in Brazil,” explained Leo Kiely, President and CEO of Molson Coors.


“So, starting immediately, I have instructed our management team to do two things. The first is to operate the Kaiser business on at least a cash break-even pace, on an operating basis.


“With the recent improvements in the business, we think this is achievable. The second is to explore a full range of options for Brazil. We want to be in the Brazilian market, but only on a winning basis, and not at the current risk level.”


The company confirmed that despite losses and slightly lower volumes over the recent months, the Kaiser business achieved considerable progress, delivering improved financial results compared to the previous year.


For the four-month period ending April 30, 2005, the Brazilian business unit experienced a negative cash flow from operations of US$ 3 million (8 million reais), compared with the same period for 2004, when the cash use from operations was US$ 22 million (61 million reais).


Molson Coors Brewing Company is the fifth largest brewer in the world. It sells its products in North America, Europe, Latin America and Asia.


Molson Coors is the leading brewer in Canada, the second largest in the U.K, and the third largest brewer in the U.S. The company’s brands include Coors Light, Molson Canadian, Molson Dry, Carling, Kaiser, Coors, and Zima.


Molson Coors
www.molsoncoors.com .


PRNewswire

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