Molson Coors Brewing Co. announced today it will shut its Memphis brewery in early 2007 for annual savings of up to $35 million, the first step in the newly merged beer maker’s cost-cutting plan. About 410 jobs will be cut in the closure. The closure is part of a wider restructuring plan that targets annual savings of $175 million within three years.
“This makes all the sense in the world; it’s not a bad first step,” said David Hartley, an analyst at First Associates Investments Inc. in Toronto. “This is the easy stuff, the low- hanging fruit.”
Molson Coors, which was formed two days ago with the merger of Montreal’s Molson Inc. and Colorado-based Adolph Coors Co., creating the world’s fifth-largest brewer by volume, will start phasing out production in Memphis in the second half of 2005. Once the closure in completed in early 2007, the company expects annual savings of $32 million to $35 million. Molson Coors will spend $70 million to $90 million to shift production, reflecting capital expenditures at its other North American breweries, along with restructuring and other costs.
The company has not made “exact” plans on where the Tennessee production will be moved, said Molson Coors spokeswoman Aimee Valdez. “We do plan to brew and package product for the U.S. in Canada, we just haven’t decided which brands and packages,” she said in a telephone interview.
Coors bought the Memphis plant in 1990 from the Stroh Brewery Co., Valdez said. Stroh sold its entire beer business in 1999.