Timing of MillerCoors’ decision to shut the Eden brewery raises eyebrows
It was only a matter of time. Due to the decline in beer sales, MillerCoors, the joint venture between Molson Coors and SABMiller, decided to close down one of its eight U.S. breweries. The decision was made public in September 2015 and will affect the Eden brewery in North Carolina, which has 520 employees. It is to shut in September 2016.
The Eden brewery was built by the Miller Brewing Company and opened in 1978. It has an annual brewing capacity of 9 million barrels beer, but in 2014 only produced about 7 million barrels.
Although MillerCoors expanded its Eden plant just five years ago with the addition of about 70,000 square feet of warehousing space, the decision to close it was ostensibly due to “significant overlap in distribution” between it and the company’s Shenandoah brewery in Virginia, which is around 200 miles away, and younger. It was built in 2007 at a cost of USD 300 million.
Incidentally, the decision, which would eliminate roughly 10 percent of MillerCoors’ total production capacity and destroy about 450 Teamster jobs, was announced on 14 September 2015, two days before merger talks between AB-InBev and SABMiller became public.
No wonder, the teamsters’ union has smelt a rat. “The announcement came as a shock to us. MillerCoors never mentioned the possibility of a plant closure during contract negotiations for a new three-year contract that was ratified in February 2015,” said David Laughton, Director of the Teamsters Brewery and Soft Drink Conference, which represents more than 1,300 MillerCoors brewery workers.
The Teamsters say the Eden brewery, which has won prizes for manufacturing excellence, is one of the most modern and efficient breweries in the MillerCoors system.
So why is it to be shut down? To conspiracy theorists, the only conceivable explanation is that SABMiller was working behind the scenes with Molson Coors, its partner in the MillerCoors joint venture, to identify and eliminate assets that would have complicated the sale of SABMiller’s stake in MillerCoors. This sale was deemed prerequisite to get U.S. approval for the looming merger, dubbed MegaBrew.
As part of the MegaBrew transaction SABMiller has since sold its 58 percent stake in MillerCoors to Molson Coors. Once MegaBrew goes ahead later this year, MillerCoors will be run as a business unit of Molson Coors.
Worrying about the closure’s impact on the local economy, lawmakers from North Carolina have taken up the issue, as they are not alone in suspecting that the timing of the announcement to shut the Eden brewery was, in fact, related to MegaBrew.
In December 2015 they sent an open letter to the U.S. Senate’s Antitrust, Competition Policy and Consumer Rights Subcommittee to seek answers to a range of questions from MillerCoors, including this one:
“Did Molson Coors, your partner in the joint venture, tell you in advance of the divestiture discussions that they did not want the Eden facility?”
The question implies that Molson Coors may not have wanted to keep the Eden brewery going and took the opportunity to shut it now, rather than later when Molson Coors would be home alone at MillerCoors and would have had to face the negative PR on its own.
Whether lawmakers and the Teamsters will ever get to the bottom of this issue remains doubtful. What is beyond doubt is that MillerCoors’ sales volume totalled 64.5 million barrels (75.5 million hl) beer in 2008, according to Beer Marketer’s Insights. By 2014, it had dropped to 55.8 million barrels (65.3 million hl).
