Coors’s Direct Solution

Coors Brewing Co. has long touted its location in Golden, Colo., as a major selling point. But geography has also proved to be a competitive disadvantage.The main brewery, largest in the world, draws from the waters of the Rocky Mountains for its distinctive taste. The problem, says vice president of logistics Charles Stelmokas, is that Coors is farther from its consumer markets than most rival brewers. So the company has had to depart from the industry model of direct shipment from factory to distributor, in favor of a series of regional warehouses. As a result, Coors manages to ship only about 60 percent of its product direct, versus the industry average of 85 percent.The extra step raises the cost of distribution while detracting from the freshness of the beer, says Stelmokas. Now, Coors is working to correct the problem. With the help of Exel, the warehousing and 3PL provider with North American operations based in Westerville, Ohio, the company has been gradually increasing direct shipments. It has gone from two distribution facilities on the West Coast to one, in Los Angeles, and is currently scouting locations for a centralized warehouse in the Midwest. At the same time, it is installing racks at the distribution facility in Golden, a mile from the main brewery, to make it more efficient. Similar reductions in the regional warehousing network are slated for Coors’s business in the U.S. Northeast.The change has been made possible by an increase in the quality of North American intermodal service, Stelmokas says. With the dust from several big mergers having settled, the railroads are doing a better job of moving product on time and damage-free. And Exel, a large intermodal provider with ties to all major rail carriers, can secure favorable volume rates. Over the next five years, Coors plans to increase its intermodal moves from 100 a week to 500, boosting direct shipments from 60 percent to 80 percent. The result, says Stelmokas, will be a 25-percent increase in product freshness.Coors and Exel are partnering outside the U.S. as well. Last year, the company acquired Carling Brewers, second-largest in the United Kingdom, from Bass Brewers, part of the Belgian conglomerate Interbrew S.A. The move shook up Coors’s long-time domestic orientation, and signaled its determination to become a global player. In addition, Coors acquired Bass’s 49.9-percent share in Tradeteam, a joint venture with Exel that provides integrated supply-chain services to the U.K. brewing and drinks industry.Dan Dean, senior director of client development with Exel, says the 3PL’s relationship with Coors has evolved over the past three years. “It has gone from a transactional one to a strategic partnership, based on our ability to support the initiatives that Coors is looking to deliver.”