In Focus

It's a Tough Job, but Somebody's Gotta Do It

NOTE: June was a month for buying. So for the whole month, we will be going into detail on the companies that we recently considered for our quarterly Chick "buy." We ended up purchasing stock in Medtronic (MDT) on June 3, 2001, but there were many, many great companies that didn't get our majority vote. We wanted to highlight them as it was a close call and they are still up for consideration for our next buy in September. For more on the companies that were considered, and what we'll be featuring all month, check out our summary.

When I'm ready to research a stock my first consideration is the "Buy What You Know" rule. Well, I know beer. Yesterday I wrote about Anheuser Busch and Bud - The King of Beers, but what the world doesn't know is that I am the Queen of Beer Drinking. I know every drinking game, from Quarters to Tap Hits. I am even a member of the Cardinal Puff-Puff Club. (Membership is determined by the successful completion of a series of handclaps while chanting silly mantras. If you screw up, you drink and start over. I totally rule!) This is not something I should be boasting about, but when researching companies, I can say my wealth of information and personal experience does come in handy.

When it came to this month's buy, the first thing I did was throw my beloved beer companies into the throng. The number one beer maker in the United States is Anheuser Busch (BUD), number two, Philip Morris (MO) with their Miller Brewing Company, and number three... Adolph Coors (RKY). Today we'll feature the Rocky Mountain High's own, Coors.

I love Coors Light. It's what I always order when I'm out, and it's what's scattered throughout my refrigerator. But as a service to this column I thought I'd do my own taste test. Every once in awhile I will encounter a place that doesn't serve Coors Light and I'm forced to order option #2, Bud Light. Today I wondered which one I really prefer. Which one has the better taste? Do I order Coors Light out of habit or do I really enjoy it more? I ran to the beer store.

The Bud Light vs. Coors Light Taste Test.
(My husband just said he wants my job.)

Coors Light - Sip. Mmmmmmm. It's good.
Bud Light - Sip. Mmmmmmm. It's good, too.

Wait a few seconds for the beer to breeeeeeaaaathe.

Coors Light - Gulp. Aha. Different. Fuller. More flavor.
Bud Light - Gulp. A bit flatter. Not flat as in bubble flat. Flat as in not as much flavor.

Wait a few seconds for my tongue to recover.

Coors Light - Huge Gulp. Can half gone. The taste stays on the back of my tongue longer. Probably because it has more flavor. More punch. Yeah, more punch.
Bud Light - Gulp. Tastes even lighter than the first time. Don't get me wrong, I still like it. I'll drink it, but its flavor is more at the tip of my tongue than the back. Not as full-bodied as the Coors.

Swish beer around in can, ask husband how the Minnesota Twins baseball game is going, pull my pants up at the belt and finish off the Coors Light.

The Bud can is half full and I crack open another Coors. There's my answer. Coors Light wins.

Now here's the fun part: I get to check out what's brewing in Golden, Colorado while I enjoy its number one product. (There's no way anyone is getting my job.)

I think I figured out why I like Coors Light more than Bud Light -- and I didn't even know it! Coors uses an all-natural brewing process, from their water, hops, cereal grains (rice and refined corn starches) and barley. They have developed special strains of barley that they are able to malt themselves. But, the best part is... no preservatives! On average, it takes 55 days to brew, age, finish and package the beer. Then we drink it, fast. So fast that I'll be right back.

In 1873 Adolph Coors, at the young age of 26, started the brewery. Back then there were hundreds of family owned breweries, but today, there are only two left. Anheuser-Busch, and Adolph Coors. Coors brewery has spanned five generations of the Coors family. Most recently, Peter Coors, great-grandson of Adolph, is the Chairman of Coors Brewing Company, while his uncle, Bill Coors, is the Chairman of the Board at Adolph Coors. Bill has been with the company for sixty-one years.

During Bill's tenure he became frustrated with steel cans because the coatings on the can caused the beer to cloud and gave it a musty smell. It also bothered him that the rusted steel cans were littering the highways and polluting the earth. It was Bill who invented the aluminum can in 1959.

In 1993 the company decided to step outside the family to get a Chief Executive Officer. They found the man in W. Leo Kiely III who came over from Frito-Lay. It is his pledge to "sell more beer, more profitably," and it looks like he's doing just that. Coors brewery in Golden has grown into the largest single site brewery in the world. Cheers to Adolph! Hiccup. ('Scuse me.)

Coors is looking almost Chicky with their 2000 annual numbers coming in like this: Gross Margins - 37%, Net Margins - 4.5%, 1.8x more cash then they have long term debt and a Flow Ratio of .80! Last year, Coors announced record sales of 2.4 billion, up 8% from 1999. What's so remarkable was that their net income was up 19%! They are either charging more for their product or figuring out a way to make it cheaper. In their annual letter to their shareholders, the Adolph Coors Company proudly states that they outgrew the U.S. beer industry for the year 2000. Their volume grew more than four times faster! (That'd be four times faster than those other brewers I mentioned above.) They set records in sales, net income, and volume. They had such a booming year that they had to dip into their reserves to have enough to sell to the customer. They actually said they could have sold more beer if they had had it in stock. Now there's a great problem. 2001 is looking just as promising with their first quarter sales up 8% from the same quarter last year, and net income up 22%.

Crackin' open anuther one. Gotta love this rserch. This past January, Cors and Molson Inc. of Canada partnered to import, markt and distrube each other's beers. In Canada, Coors Light is the nmbr 1 ligjht beer. And it ain't all me, I swear. I hjave friends.