Molson Coors Readies For Beverage Wars

by The Investment U Research Team

Molson Coors Brewing Co (NYSE: TAP) announced impressive numbers this morning, on earning that doubled in the first quarter. It sent the stock up over 10%. They credit this achievement to an aggressive cost cutting strategy.

Interesting that its biggest competitor, the Anheuser-Busch InBev (EBR: ABI) conglomerate, is also aggressively cutting costs from the bloated Anheuser-Busch Company.

You’ll see – or, more correctly won’t see – fewer Superbowl ads, fewer television slots, and a much smaller presence in sports programs and endorsements from both of these companies. Frugality is back in vogue.

Molson Coors and InBev have been cutting bonuses, reducing expenses and removing fat with the zeal of a liposuction clinic. And ultimately this cost cutting will mean sizable profits for investors.

It’s a new stage in the ongoing beverage wars that we’ve seen in both alcoholic and non-alcoholic beverages.

The question is whether these brewing behemoths will become as antagonistic as the PepsiCo (NYSE: PEP) – Coca-Cola (Nasdaq: COKE) relationship. That fight forced both companies to put their best foot forward and created lean profit machines. We can only hope the same goes for Molson Coors and Anheuser-Busch InBev.

Symbols mentioned in this article: TAP, ABI, PEP and COKE.

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