Coors Beer Case

The Problem(s) - Mr. Brownlow faces the following problem:

“Does the south Delaware Coors distributorship offer sufficient investment potential given Mr. Brownlow’s current business and personal situation?”

Recommendation(s) - South Delaware Coors distributorship certainly offers sufficient investment potential given Mr. Brownlow’s current business and personal situation.

Profit Potential: Market share profit is growing. It can noted from Table 1 the market potential is increasing at an average rate of 6.26%. As per the pro forma statement Table 4 there is a steady and a positive increase in the profit before tax. Thus it can be said that there is a profit in this distributorship. Also the Payback period is nearly on an average 4 years for best and the worst case as per Table 3. The present value of future cash flows also shows that this distributorship is viable. This business has a positive net present value, then it is expected to produce more income than what could be gained by earning the discount rate, which means that Mr. Larry should go ahead with the project. This opportunity will not only provide Larry with gain, opportunities and rewards of running a small, self-owned business but also produce significant profits over time even if in future faced with market and economic challenges. 

Market Growth and Consumer Preference: The results from consumer questionnaire depicts that nearly 70 per cent consumers would certainly buy Coors. The consumers prefer Coors mainly because of its taste. Thus, this positive factors can lead to a better market growth. It can be observed that Coors has a strong brand name which is the prominent feature considered by the consumers before buying (Exhibit D). In brief, these factors will have a positive impact on market growth and sales.

New Market: Selling the product in new market will not be the same. It is a new market where there is plausible opportunity of sales. New market may not be success for certain brands but for Coors the results seems to be more promising. The advantage of the new market is the drinking population and its growth in the two counties. Also the consumption is steadily increasing in Delaware. This turns out to be a good hope for Mr. Larry to invest. South Delaware beer consumers consume on average less per capita than the state as a whole, so there may be room to increase consumption among those who are light drinkers.