Mark Hunter: The man who makes every penny count

Mark Hunter, CEO of Molson Coors UK, talks to Phil Mellows about the prospect of making 4p on a pint of beer, diversifying the company's portfolio and developing the iPod of the beer world.

There's a technical term for it. "It's bonkers." Mark Hunter shakes his head. "You get up in the morning, you brew some great beer, market it, sell it, and you don't make any money from it. It's a crazy position to be in, and we're not prepared to do that any more."

The CEO of Molson Coors, brewer of Britain's biggest selling beer, is talking about the company's decision to stop chasing market share at the expense of profitability, and start pushing up the prices it charges to pub operators.

According to Hunter, progress is already being made in that direction — but the numbers remain tiny. Molson Coors is currently making 2p going on 3p on every pint it sells. Is there a target?

He looks out the window and smiles: "4p?"

Doubling profit on nearly two billion pints of beer a year would bring no mean return, of course. The question is, can Molson Coors take its customers with it on its quest for a saner marketplace? For Hunter there's no alternative.

"This is a fundamental challenge for the beer industry," he says. "The profit pool is down 30%, if not more. We have to look to the long term of the beer market. Every brand has to be profitable for us. Every customer has to be profitable for us. If they aren't, we have no money to reinvest in our brands. So we have walked away from market share, and we'll continue to do that.

"There has been a depreciation of profitability in the beer market over the past five years. If other brewers want to continue doing that it's up to them, but we're going to do it differently, and if we can, we'll push profitability up across the market."

Consistency​

The risk of this strategy was highlighted last summer when JD Wetherspoon (JDW) switched its main lager supplies to Carlsberg. Hunter doesn't confirm whether or not price was the clincher, but he respects JDW's decision.

"Our customers in general understand what we're trying to do. We've had positive feedback. People appreciate that we're being consistent, transparent and fair. We're sticking with our principles — and it will mean we can reinvest in the category.

"Anybody can sell beer cheap, but that doesn't do anything for the health of the category."

Hunter is already proud of the work Molson Coors has been able to do, such as helping 2,000 pubs improve the quality of beer at the bar, and the campaign to attract a million people back into the pub by offering a free sample of Carling.

"There are a lot of pubs closing and that has to be a concern. But there are a significant number of pubs doing well. These pubs are founded on getting the basics right — a clear proposition, welcoming and knowledgeable staff, good quality drinks and good value food.

"We want to invest back in our customers, but we want it to be a two-way street. They have to be interested in working with us. Then we can work together to get the

drive and passion they need at the point of purchase."

Decline​

All this takes place against the background of a UK beer market in long-term decline, confused by a short-term volatility that, for example, saw sales plummet 20% in the January snows, before recovering in February.

"If you take a half-step back from that volatility the trend isn't positive, but it's slightly better than it was a couple of years back. It's a constant trajectory, though it is downward, and it has been over the past 20 to 25 years, and it's difficult to predict any significant change in that trend in the future.

"Our objective is to provide for as broad a range of occasions as we possibly can, from a couple of pints of Carling with mates in the pub to a more placid, food-based occasion with Blue Moon or Singha. It's the breadth of occasions that counts."

Carling, the beer that Hunter himself, as brand manager and marketing director at Bass Brewers, took to great heights either side of the turn of the century, still has a major part to play. "Carling is still a monster, it's still the biggest beer brand in the country," he says. "The consumer scores are stronger than they've ever been, and I think we've nailed the brand occasion with the 'Know who your mates are' ad campaign."

Diversity​

Yet the company has certainly made clear its intentions to diversify its portfolio in recent months.

The Cobra Beer Partnership, the joint venture with Karan Bilimoria, is now fully integrated into the Molson Coors operation, and while Bilimoria chairs the partnership and plays a role as evangelist for the brand that none could surely emulate, it's plain Cobra must take up a sharply defined position in the big brewer's line-up.

"It's an attractive brand for us to have, considering the growth in eating out," says Hunter.

"The Indian food occasion is at the heart of the Cobra proposition. You can imagine it like a target. The bull's-eye is Indian restaurants. Outside that it's pubs with Indian food on the menu. Then the off-trade with takeaway ethnic food. It's a great opportunity. The challenge is to be clear about the brand's identity."

Adventures into the draught lager market look unlikely.

Singha, from Thailand, came on board last July and does a similar job for cuisines from further East.

"There are 1,200 Thai restaurants in the UK and Singha is in 1,000 of them," says Hunter. "There is great growth in Asian food and Singha sets us up for where the market is going to go."

Blue Moon, a US craft-brewed wheat beer, flavoured with coriander and orange peel, is again aimed at the beer-with-food opportunity and will be offered on draught to selected pubs this year.

Worthington Red Shield, a spin-off from the legendary White Shield, is completing trials and will become a key Molson Coors player in the resurgent cask-ale market with a full launch in the summer.

Among established brands, Grolsch is being repositioned this year to stand alongside successful upmarket Continental imports such as Peroni. Hunter admits that Grolsch has "lost its cachet through being sold on price — but it's still an esteemed brand".

Expect to see more of the swing-top bottle that Grolsch was once synonymous with. "It's like the Coke bottle, an iconic symbol of the brand."

Bittersweet​

And Hunter has another surprise up his sleeve. The BitterSweet Partnership, which Molson Coors launched a year ago to promote beer drinking to women, is working on a brand specifically aimed at the female market.

"Of course, we can't be sure it will work," says Hunter. "But 20% to 25% of the beer market has disappeared over the past 30 years, and in the on-trade that's 40% to 50%. In that situation it's ridiculous for the industry to ignore 50% of the population.

"And there's a need for more innovation. When was the last time there was a buzz around beer? Caffrey's in 1994? Extra cold in 2003? We haven't had enough of that.

"In other markets, innovations such as the iPhone and the iPod have sparked a national conversation. I believe there's an opportunity to do something similar in beer."

My kind of pub​

"I was out in trade in Nottingham the other week and we came across this small place off the main circuit. It had no music of anything, but there was an energy about the place, the conversations, the laughter. The urge was to stay there the rest of the night!

"The main thing for me is that a pub feels welcoming. It doesn't have to be a traditional place, but it has to have that buzz about it — the craic."