Just three years ago, the CEO of Molson Coors was bragging about Denver being home to the world’s third-largest beer maker.
The announcement that Molson Coors would shift its corporate headquarters from Denver to Chicago ends a nearly 150-year corporate governance relationship between the beer “brewed with pure Rocky Mountain water” and Colorado.
While state leaders and the company emphasized the Golden brewery would remain, and get big investments, it’s still a blow to the state’s economic development.
When a Fortune 500 company moves to Colorado, the governor’s office rightly trumpets the news. One longtime economic development official said nabbing a Fortune 500 company “is the bomb for people in our world.”
And so it stands to reason losing one will hurt, at least a little.
“I do think it matters,” said Richard Wobbekind, a senior economist at the University of Colorado Boulder. “This is an iconic Colorado brand that will be headquartered elsewhere.”
Large corporate headquarters generally help stabilize employment during recessions, Wobbekind said. That’s because the biggest companies generate massive revenues, and have become an even larger part of the overall economy. In 2013, total revenue from Fortune 500 companies made up 73 percent of GDP, according to an analysis by FiveThirtyEight.
With Molson Coors’ move to Chicago, Colorado goes from 10 Fortune 500 companies down to nine. Minnesota has about the same population as Colorado but has almost double the number of Fortune 500 companies at 17 (including five in the top 100; Colorado has none in the top 100).
“You’re not going to win them all,” said Don Elliman, who served as the head of Colorado’s economic development under Gov. Bill Ritter. “We’ve won a hell of a lot more than we’ve lost.”
Business formation is extremely strong in Denver, both in startups and relocations. Unemployment is below 3 percent. Research shows that the vast majority of new job creation is actually in younger, smaller firms. And Denver’s economy is the envy of most states.
Still, said Jason Hanson, chief creative officer at History Colorado, which is now hosting an exhibit on Colorado's brewing history, Coors move out of Denver is an important event.
"Their marketing of Colorado’s spectacular natural amenities and the Rocky Mountain lifestyle throughout the 20th century did much to shape the modern Colorado we all enjoy today," Hanson said in a prepared statement. "In that sense, this shift toward consolidation outside of Colorado is a disappointing development and marks a significant new milestone in Colorado’s brewing history."
Elliman also said any concerns about Coors’ move may be more about sentiment than economics. He remembers piling Coors beer into his car for the drive back to the east coast as a younger man after ski trips to Colorado: “Because you couldn’t buy it back there, back in those days.” Coors enjoyed a certain cult status and was difficult to get east of the Mississippi.
There’s a sound logistical argument behind locating a truly global business like this in Chicago.
“I mean DIA has great connections, but O’Hare’s got even greater connections, let’s be honest about it,” Elliman said.
And this illustrates some of the reasons Denver was not a top choice of Amazon for its second headquarters. Denver, while growing fast, is still much smaller and more isolated than other major cities. Chicago's metro area is three times the size of Denver’s for instance.
“This was a tough choice,” said Mathew Hargarten, senior director, corporate communications for Molson Coors. But “marketing is so important to our company and Chicago has so much world-class beverage marketing talent.”
That has been the case for more than a century. After reaching New York from Germany, Adolph Coors initially settled in Chicago to work as a brewery foreman before heading west and seeing the brewing potential along Clear Creek, where he opened the Golden Brewery in 1873.
From there, the beer he crafted gradually developed something of a cult following, based partly on its limited availability. Deep into the 20th Century it was only sold in 11 western states and was so prized that folks like actor Paul Newman had riders inserted into their contracts requiring Coors to be present on the set. Bootleggers earned as much as $15 per case to deliver it to places east of the Mississippi, and a Coors beer run became the plot of 1977’s second highest-grossing film, "Smokey and the Bandit."
An ‘Inflection Point’ For Beer
As the 21st Century began, consolidation came calling for the brewing industry.
In 2005, Coors and Canada’s Molson combined in what was billed as a “merger of equals.” Soon after, Molson Coors and SABMiller entered into a joint venture. Additional breweries were purchased by Molson Coors or absorbed by the partnership with Miller. By 2016, Molson Coors bought out the remaining shares of SABMiller creating the world’s third-largest brewer.
None of it was enough to prevent the gradual erosion of market share, as new products from craft beer to hard coffee to hard seltzer rose. Not to mention competition from other alcohols like whiskey, which is enjoying tremendous growth.
The company said in announcing the corporate reorganization that the industry is at an “inflection point” and that marketing and innovation are the saviors. Coors and the other legacy brands need to retool to appeal to a new generation with less brand loyalty.
Molson Coors also needs to jump on fads quickly, which is partly why the company plans to invest “hundreds of millions” into its Golden brewery. They hope to modernize the historic facility and turn new products out in as little as four months.
The company knows closing the Denver office will grab the headlines, “but what we think is just as important, if not more important, is we're reinvesting into the Golden brewery, and we're not going anywhere,” said Hargarten.
Colorado will still be home to about 2,000 Molson Coors jobs, mostly at the Golden brewery, more than any other place, he said. The company plans to keep its sponsorship of Coors Field, the home of the Rockies, and continue to invest in philanthropic causes.
About 300 people work in the Denver HQ and many now have difficult decisions to make, including Hargarten, who must weigh leaving Denver for Chicago.
“I moved here from Chicago, and we love it here,” he said. “So it's gonna be hard.”
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