When Tom Long, president and chief commercial officer for MillerCoors, speaks about his company's successful product innovation, his excitement is palpable, a clear indication of how significant a role new products and cutting-edge packaging play in the brewer's growth. From a new small-batch beer called Batch 19 to cold activated packaging technology, it's clear MillerCoors has a nimble and effective strategy to fill its innovation pipeline and consistently drive sales. "We're certainly punching above our weight in this area," Long says. "I can say, with confidence, our clearest measure of success from MillerCoors brand innovation is sustained growth behind Coors Light Rocky Mountain Cold Refreshment and the complementary brand innovations to support that cold positioning." Indeed, the country's second-largest brewer, which has its corporate headquarters in Chicago, grew its revenue modestly in 2009, an accomplishment given the tough economy and sluggish beer sales overall. The brewer, which charted total new revenue of $7.6 billion in 2009, also grew four out of its six national focus brands last year, according to MillerCoors CEO Leo Kiely, in a market where every beer category, with the exception of craft, was down. The MillerCoors team is committed to an aggressive growth strategy with a key focus on brand innovation, putting the company at an advantage when the economy, and then, in turn, the beer market, returns to robust growth. "The economy continues to hamper overall industry volume. And it looks to me that it's one step forward and two steps back," Long notes. However, Long is clear that the MillerCoors organization, which includes 9,000 employees at eight major breweries across the United States, the Leinenkugel's craft brewery in Chippewa Falls, Wis. and two microbreweries in Milwaukee and Denver, is not inclined to be content with excuses. "There are many places of growth in the beer market and it's up to our marketers and our distributors to make sure that we're putting the most relevant brands with the best positioning in front of consumers and letting beer take its rightful place as the drink of moderation for American drinkers," Long says. Innovation in the Works With the idea that two heads are better than one, MillerCoors was formed in 2008 as a wholly owned joint venture between brewing giants London-based SABMiller and Toronto-based Molson Coors, which combined the two companies' US and Puerto Rico operations. Now with a 30 percent share of the US beer market, MillerCoors has proved during its first year of operations that it has the muscle to compete effectively against rival Anheuser-Busch InBev. Built on a foundation of 289 years of brewing heritage MillerCoors leverages the strength of its beer brands, including industry heavyweights Miller Lite, Coors Light and Miller Genuine Draft, as well as craft brands like Blue Moon and Jacob Leinenkugel Co., and import brands such as Pilsner Urquell and Grolsch, to drive profitable growth and appeal to consumers' beer preferences. Despite the fact that the overall beer market was down 2.7 percent last year, according to Beverage Marketing Corporation, several of MillerCoors' key brands grew in 2009. Coors Light was up 4.6 percent based on sales, Miller High Life increased sales by 5.3 percent and Keystone Light was up 22.6 percent, according to Information Resources Inc. Blue Moon, a brand MillerCoors CEO Pete Coors refers to as the company's "15-year overnight success story," continues to chart double-digit growth. In a highly competitive beer market and with consumers' discretionary income shrinking, innovation plays a key role in the company's growth strategy and helps to build on each brand's core positioning. "For us, innovating right means focusing the innovation on the core brands first and then scaling those innovations so we can make those brands relevant to as many people as possible," Long says. "In fact, in a really tough economy, when innovation is done right, it's the goose that lays the golden eggs." Much of the company's innovation has centered around packaging that drives home the "Rocky Mountain cold refreshment" positioning surrounding the Coors Light brand. In 2008, the company launched the Coors Light Cold Activated Cans in 8-, 10-, 12- and 16-ounces, expanding on an innovation launched a year before with the 24-ounce Cold Activated Can and the Cold Activated bottle. A pioneer in cold activation technology, the Coors Light Cold Activated cans and bottles were designed to deliver Coors Light in the coldest, most refreshing way, as the mountains on the Coors Light bottles and cans turn from white to blue when the beer is the "right" temperature, usually around 45 degrees. According to Long, since its introduction, the innovation has driven a million and half barrels of incremental growth for the Coors Light brand franchise. Other Coors Light and Coors Banquet innovations and packaging enhancements include the vented wide mouth can, the industry's first built-in vent and a wider opening for a smoother, draft-like drinking experience; the super cold draft, a draft system that pours Coors Light below freezing; the frost-brewed liner and the plastic bottle cooler box. Then two months ago, MillerCoors rolled out its latest Cold Activation technology innovation with the launch of the Coors Light Cold Activated Window Pack. Continuing its focus on packaging differentiation, the company also recently launched the Miller Vortex, a bottle with specially designed interior grooves that "increase the aroma and enhance the flavor" of Miller Lite, according to the company. To enhance at-home drinking occasions, the brewer announced national distribution of the Miller Lite Home Draft system, designed to provide tap beer taste at home. The refrigerator-friendly, draft-beer system also is available for Coors Light and provides 16 12-ounce pours of draft beer that stays fresh for up to 30 days. "About one-third of American consumers prefer draft beer over bottles and cans and this innovation allows them to enjoy draft beer right from their fridge, and to do so with a package that is environmentally friendly and delivers great quality," Long says. "We’re trying not just to get occasions when beer drinkers get together to socialize, but to get permanent space in refrigerators in American households." Three years in the making, the at-home draft system hit the market right when on-premise beer sales began to slump due to the challenging economy, making the package even more relevant to consumers. The company prides itself on being a pioneer in the beer industry, such as with the development of MGD 64, a reformulation of Miller Genuine Draft Light that hit the market in Wisconsin in 2007 before eventually expanding nationally. With only 64 calories, MGD 64 was the lowest calorie beer to hit the market at the time and spurred rival A-B to introduce Budweiser Select 55. "We created the ultra light category with MGD 64 and in its first two years, we've sold nearly 1 million barrels of that brand," Long says. Sales of the brand have accelerated since its initial test launch, charting $53 million in sales in 2009. Long says the company approaches innovation first by researching consumer shopping and drinking habits, watching where and how consumers purchase and enjoy the company's beer brands. "We learn how people want to drink the beer and then try to give them a package that is better and gives them what they want," he says. Other innovations slated to hit the market include Coors Light 16-ounce aluminum cans and Blue Moon in cans. From Grain to Glass Using the same passion and drive that fuels its innovation developments, MillerCoors is equally focused on sustainability across all aspects of its business. "How we treat the Earth and the environment in general contributes to the personality and character of our brand. So we think about sustainability in a very similar brand building way as we do innovation," Long says. The brewer is making a concerted effort to reduce its environmental footprint by reducing and reusing all of the waste—from grain to glass—produced at the facilities. Last year, the company released it first comprehensive sustainability report since the joint venture in 2008, highlighting the strides the company is making in areas like reducing water consumption, waste, energy and its overall carbon footprint—progress that Long calls "bold and measurable." Constantly striving to reduce the amount of water it uses to brew its beer, MillerCoors' water to beer ratio is 4.11 barrels of water for each 1 barrel of beer produced. The brewer is aiming to reduce that ratio to 3.5 to 1 by 2015, and several of its breweries are achieving world-class efficiency already. "Our Fort Worth brewery recorded 3.4 to 1 water to beer ratio and our Trenton, N.J. brewery remains under a 4.0 to 1 water to beer ratio," Long says. In the area of waste reduction, the brewer reuses or recycles 99 percent of all of its brewery waste, including glass, paperboard, plastics, metals and byproducts, and set a goal to reduce the waste it sends to landfills by 15 percent by 2015. "We surpassed that goal in a single year and reduced it by 20 percent," Long says. "And two of our breweries achieved zero waste to landfill for a period of several months." Renewing its commitment to the Environmental Protection Agency's Climate Leaders Program, the brewer pledged to reduce its greenhouse emissions by 8 percent in five years. "These are the kinds of things that more and more consumers, communities and employees and potential employees care about because they want to work for companies that are committed to operating sustainably," Long says.
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