Ian Patterson
North America's major breweries are struggling these days, and the oldest of them is no different. In the past two years, Molson Coors Canada suffered a 23% plunge, and then a further 12% drop, in pretax income. It's the job of a tall, svelte and studious-looking Belgian to turn that around.
Like perhaps many of his fellow young countrymen, Fred Landtmeters had his eye on a career in beer from his early 20s. But his first marketing job had him handling laundry detergent. He moved into soft drinks with Cadbury Schweppes, and from there into beer with the giant Belgian brewer Anheuser-Busch InBev. Seven years ago, his InBev job took him to Prague, where a series of acquisitions led to him working for Molson Coors, now the world's third-largest brewing company. The corporate leadership saw something in Landtmeters. After two years, they promoted him to CEO of Molson Coors U.K. His success there landed him a bigger job as CEO in Canada, inheriting what he calls "one of the crown jewels of the company." (1) He took over in October, 2016. Six months in, he sat down with us for his first Canadian interview.
How is beer different from other beverages?
Beer has the potential to be part of every enjoyable moment. It's one of the small pleasures in life. One of the ambitions that we should have as brewers is to make beer a synonym of a great moment.
Is there anything that sets Canadian beer drinkers apart from those in other countries?
If you want my first impressions, Canadians love their beer. Canadians love their sports. Maybe a bit of a stereotype, but for me, that was great to see. I think the difference is that, in Belgium, we tend to believe we have a strong beer culture. When I went to the Czech Republic, also there they have a very strong beer culture. In the U.K., it's definitely there. And I was surprised—I didn't hear that we have a strong beer culture here in Canada.
Are you familiar with the concept of the Canadian hoser?
No, but I've got a sense you're going to explain to me what that is.
It's a stereotype of the Canadian beer drinker: small-town, unsophisticated, likes to get together with the boys, drink a brew and watch the game. To say that we don't have a beer culture—I think people would disagree, because of the primacy of that stereotype. I'd argue that we are moving beyond it. But it holds on.
Every country probably has a type of beer drinker that you don't want to be associated with, necessarily, or that you don't want to be stereotyped as. But if what you're saying is we are getting beyond that stage of underplayed beer culture, I would be more than happy to see that, because I think all of the ingredients are there. If you look at the variety of beer styles, brands, breweries there are in this country, Canada has got all the ingredients to have a very strong beer culture.
What consumption trends are you stepping into here?
If you look at the mainstream segments, premium lights is definitely a category where we have seen erosion (2), where we have seen an opportunity to do better, to increase the relevance of our brands. Why? Because other beer styles have come into play. The craft brewers have offered consumers much more choice than there used to be. (3)
Can you quantify how important craft beers are to Molson Coors?
It's fair to say that we have a reasonable market share. The thing for me, more than market share, is how it fits into a complete portfolio, offering enough variety versus too much.
In an effort to compete in the craft segment, many large brewing companies are buying and absorbing craft breweries. What's the Molson Coors approach?
We've got Granville Island. We've got Creemore. We've got Brasseur de Montréal. The last thing we want to do is to absorb those into our system or into our bigger breweries network. There has been a lot of debate about, what's the definition of craft brewers? Can you have craft brands as a big brewer? It's the same debate across the world. I think as long as we guarantee that we preserve the authenticity of the craft brewery, I don't see why a craft brewer could not operate within Molson.
What do you look for when deciding whether to acquire a craft brewer?
I would be looking for a story, and a great master brewer, in a location that complements our current portfolio well.
You mentioned "enough variety versus too much." An industry publication recently said, "New is the consumer's favourite flavour." People will drink a brand once and move on. How do you deal with that?
First, we need to offer new things to our consumers from time to time. But we also need to be aware that at some point people will confirm their choices. I don't think the new generations of consumers will continuously hop from one beer to another. I believe that for some occasions, brands can make a strong case for consistency of choice. And I think consumers will get there.
There are different ways of approaching this problem. One way of reducing choice at pubs is to get them to sign exclusivity contracts. Are there situations where Molson Coors requires or encourages a pub to enter into a contract to serve only Molson Coors products?
I cannot give you a definitive answer. The way we handle our contracts, I haven't seen too much exclusivity, to be honest. Do we have it? That is something that
I would need to double-check. The right portfolio for the customer is what we would go for.
Does it happen in other markets?
In other countries? Yes. More so. And that's maybe why I don't think about Canada as a country of exclusivities, compared to some of the countries that I've seen back in Europe.
For example?
Croatia, which is one of our biggest central European markets. In the Czech Republic, you would be a Staropramen outlet or you would be a Pilsner Urquell outlet. But not both. Here what I see is different brewers in the same place, and there's no problem.
I gather that with the completion of Molson Coors' $12-billion acquisition of Miller Coors, the plan is to bring certain U.S. brands to Canada. True?
We're definitely evaluating how the portfolio in the U.S. could be relevant to Canadian consumers. (4) I don't think we have announced which brands have the best chances. We need to make sure we pick the right ones.
You're also planning to focus on improving sales of your established brands, Coors Light and Molson Canadian. Have you set a sales target, at least internally?
I haven't named a target yet. I know our colleagues at Miller Coors have called a target to get back into volume growth by 2019. I have deliberately not done that. I am clear what success looks like. What I have asked the team to do is to come back with a realistic view on what that can translate to in terms of specific KPIs [key performance indicators]. (5)
Let's talk trends. Dry beers were huge once. Then came ice beer. Now there's a plethora of new trends—IPAs, dry hopped beers, milk beers, fruited beers, sour beers and so on. What's the lifespan of a beer trend these days?
There was a time when trends lasted five to 10 years. I think as in many industries, the life cycles have a tendency to shorten down. What's also happening is people trying very different things to get consumers' attention—sometimes pushing it a bit far, if you ask me. Which probably is also causing the length of those life cycles to shorten, simply because the viability might not be great from the beginning. Honestly, I sometimes wonder to what extent any consumers are waiting for this to happen.
One thing that I know some consumers are waiting for is the legalization of marijuana. As a company, how are you approaching that looming reality?
We are watching it. My personal view is, we've been in the beer industry for more than a couple hundred years. That's where our expertise lies.
Have you studied what's happening in Colorado and what impact legalization had on beer sales?
I'm still waiting for the one compelling report that definitively says this was a good thing for the beer industry or not a good thing for the beer industry, because we are hearing very different feedback from Colorado.
If you had a barbecue at your house, what would you serve?
Well, Molson Canadian—that's the one I would serve if I would have friends over. The alternative to that would be Creemore, which I stock regularly in the fridge.
Do you remember the first beer you ever drank?
I do, yes. It's called Rodenbach. It's a Belgian beer. A mix of sour beer and red IPA would be the best way to describe it. I never had a second one of those.
There's something I've always wanted to ask a beer executive. In North America, beer companies invariably use a specific adjective for beer that has never made any sense to me: smooth.
Smooth.
How does the word "smooth" relate to beer? It's a carbonated drink.
I see what you mean. It's an adjective that has been used very often in the context of beer.
Is it used in other countries?
It is. For me personally, smooth is associated with a wheat beer, for example. I don't know, it's probably very personal.
"Smooth" might work for whisky, but beer doesn't make sense. It's probably something that can never be answered.
Let it remain a mystery.
(1)
Founded in Montreal in 1786, the Molson Brewery is the oldest in North America. Molson merged with Coors in 2005, a decade after Labatt was acquired by what is now Anheuser-Busch InBev.
(2) Lower consumer demand saw the sales-to-retail volume of Molson Coors drop 2.9% in 2015, and 4.3% in 2016.
(3) According to the most recent estimates, there are some 520 craft brewers in Canada,180 in Ontario alone (plus about 30 brewpubs).
(4) Brewing companies refer to beer drinkers as "consumers." They use the term "customer" to refer to distribution points, such as pubs or beer stores.
(5) Share of the beer market in Canada:
Molson Coors: 34% | Anheuser-Busch InBev: 43% | Others: 24%
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