Coors’ New Brew: Taking Out the Political Aftertaste

The delegation from Adolph Coors Co. did not get the Empire State’s warmest welcome when it arrived in Albany, N.Y., last March to publicize the brewery’s expansion into the New York market.

As the group trotted up the state Capitol steps, they were met by an angry group of union members who unfurled anti-Coors banners and chanted, “One, two, three, four, we don’t want no Coors no more.” When a Coors wholesaler lunged for a union banner, a scuffle broke out.

The incident was another reminder of the antagonisms that have lingered like a poisonous cloud over the Colorado brewery since a bitter strike brought on a union boycott 10 years ago. The company, run by one of the nation’s richest and best-known conservative clans, has been denounced by unions, feminists, minorities and gay rights activists in protests that seemed to occasionally quiet down but never cease.

Somehow, Coors has managed to antagonize even the barley farmers of North Dakota and the National Education Assn.

But now Coors is trying to change all that. Last month the company settled the AFL-CIO boycott, taking the most dramatic step so far to improve an image that has been a dangerous competitive liability.

Led by a new generation of Coors family members, the company has also pumped millions into charitable and educational enterprises, and has signed agreements with black and Hispanic groups pledging that Coors will invest heavily in those communities.

“The boycott stirred up negative feelings for a long time, and the job now is to wipe them away,” said Peter H. Coors, president of the brewery division. “Who wants to drink a beer when the guy on next bar stool might say, ‘The people who make that beer are anti-union, or anti-this or that’?”

Overhauling Coors’ image is a task such as few companies have faced, marketing specialists say. While many businesses contend with public dissatisfaction, rarely is a company the target of prolonged assaults by national groups as Coors has been.

Complicating the job is that Coors family members--plain-spoken, willful Westerners who often disagree with each other--plan to keep taking stands on political issues. “Will we keep quiet? Don’t bet on it,” declares William K. Coors, 71, who is chairman and chief executive of the company. “Taking part in politics is a duty.”

Settlement of the boycott hasn’t altered the family’s passionate belief that Coors doesn’t need a union. Nor has it washed away bitter feelings that the family, as William Coors puts it, “has been the target of a real political persecution.”

In politics, it is Vice Chairman Joseph Coors, 70, who is best known. He is a member of Ronald Reagan’s “kitchen cabinet” of advisers, a renowned bankroller of conservative causes and a man mentioned in 1984 as a possible successor to then-presidential counselor Edwin Meese.

This summer, Joseph Coors appeared before the congressional committee investigating the Iran- contra affair to explain a donation that he made to Lt. Col. Oliver L. North for the purchase of a military airplane for the Nicaraguan rebels.

Strong Opinions

William Coors has also been active in politics. And while Joseph Coors’ sons, Peter, 41, and Jeffrey, 42, say that they are less likely to embroil themselves in controversy, they, too, speak up for conservative causes.

Coors’ efforts to burnish its corporate image come at a critical time for the company, which is the fifth-ranked brewer in the country and last year reported revenues of $1.3 billion. The company’s light brew enjoyed an almost cult-like status among young Americans in the early 1970s, but more recently Coors has struggled to hold market share in the face of flat industry sales and fierce competition from much-larger Anheuser-Busch and Miller.

If the company doesn’t gain ground on its rivals, it may fade from contention, Coors marketing officials say. “Our future, if we have a future, will be decided between now and 1990,” says Robert Rechholtz, the company’s executive vice president of marketing.

The Coors family has been known for light beer and strong opinions since great-grandfather Adolph, a stowaway immigrant from East Prussia, built a brewery in 1873 between towering mesas in the foothills of the Rocky Mountains.

Today, the brewery dwarfs the surrounding town of Golden, which has a population of 15,500 and lies 20 miles west of Denver. With vast concrete walls and steaming cooling towers, the Coors brewery might be mistaken for a nuclear power plant.

Family members control 80% of Coors stock, giving them a collective wealth of over $600 million, Forbes magazine estimated. Rawboned, with prominent jaws, the four Coors senior executives share a resemblance as well as a name.

Coors’ problems and the boycott date from 1977, when the Brewery Workers International went on strike. When employees voted to decertify the union a year later, the Brewery Workers protested that the votes of recently hired scabs had tipped the balance.

Striking workers who asked for their jobs back were eventually rehired, but the AFL-CIO continued its boycott. The organization attacked Coors as a union-buster, criticized the company’s use of lie-detector tests to screen job applicants and claimed that the company discriminated against women and minorities.

Government agencies have investigated the discrimination charges, but have not found them to be true.

Public criticism of the company may have peaked in February, 1984, when the Rocky Mountain News reported that William Coors had told a group of black Denver business executives that blacks lacked the “intellectual capacity” to succeed. The Denver newspaper quoted him as saying that “one of the best things (slave traders) did for you is to drag your ancestors over here in chains.”

William Coors denied that he had made the statements and sued the newspaper, but publicity about the incident brought renewed calls for boycott. City councils in several cities, including New York and Detroit, adopted resolutions to express their disapproval.

Late last month, Coors dropped the suit after the newspaper printed an article citing Coors’ good record with the minority community, and saying that it regretted the headline over the original article. “Undoubtedly, the headline and certain references in the article could have been more precisely prepared and worded to avoid any misinterpretations,” the newspaper said.

Coors stepped up its efforts to help the minority community after the controversial speech.

In September, 1984, Coors and a number of black and Hispanic groups announced that they had signed “covenants” that committed Coors to special investments in the minority community. The company agreed to set aside about $650 million over the next five years for minorities, in the form of wages, procurements from minority-owned businesses and contributions to minority-oriented organizations.

After a slow start, Coors says that it has now spent about $240 million toward this goal. By making contributions and sponsoring joint programs, it has cemented ties to a number of minority organizations, such as the NAACP, the Urban League and the League of United Latin American Citizens.

The beer concern says that since 1984 it has signed up nine Hispanic and five black local distributors, far more than any competitor.

The company’s efforts have sometimes met resistance. In 1985, the Detroit City Council recommended that the city fire department reject Coors’ offer to give 1,000 smoke alarms to poor city residents, citing what the council said was company’s anti-union attitudes.

“There was a lot of publicity about that incident, most of it sympathetic to our side,” said John Meadows, the executive in charge of Coors’ community programs.

Coors’ image problems seem to have made it peculiarly vulnerable to other criticism as well.

Company Makes Inroads

Last year, an organization called the South Dakota Farmers Union boycotted Coors products because of Coors advertising that cited the company’s “select barley strains.” The farmers contended that such advertising maligned the family farmers who presumably could not produce such grain.

But elsewhere, Coors’ efforts seem to have made inroads.

“Because of the past, I think some blacks won’t ever want to drink their product,” says Lawrence Borom, executive director of the Urban League of Metropolitan Denver. “But I don’t think any corporation in this area can claim to do more for minorities than Coors. I think they’ve already gotten rid of a lot of the stigma.”

The National Organization for Women was among the groups that adopted boycott resolutions in 1984, citing, among other things, Joseph Coors’ opposition to the Equal Rights Amendment. NOW still has a boycott officially on its books, as does the National Education Assn., the teachers’ group.

But NOW’s top official in Colorado acknowledges that she may have a different view of the company than that of some out-of-state NOW members. Coors family members have not only avoided public statements that would rile feminists, she says, but they are also contributing large sums to such worthy causes as special health programs for women.

“They’re shoveling money into those things,” Patsy Sitzman said. “I think they’re trying to make nice.”

There are some signs that the beer has won greater acceptance with minority consumers. Felix Burrows, president of Viewpoint Inc., a Chicago consulting firm that was hired by Coors to monitor its progress in living up to the covenants, says his research indicates that about 1.5 million barrels of beer, or 10% of Coors sales, are now to blacks, up from 5% in 1984.

While Coors has worked to smooth relations with minorities, women and other groups, straightening its relations with labor presents an even more pressing challenge.

Coors insistence that the company does not need a union has become more than a philosophical issue, for the brewery is now facing organizing drives by both the Teamsters and the AFL-CIO-affiliated Machinists union. The largest brewery in the world, it is also the only major U.S. brewery that is not unionized.

“We treat our people well enough that they don’t need somebody outside to represent them,” contends Peter Coors.

Last year Coors eliminated one long-debated issue with labor when it stopped using the polygraph, or lie-detector, to screen job applicants. The company first used the device during labor disputes, and contended that it was valuable in determining whether applicants would steal from the company or take drugs on the job.

(Forty-five percent of applicants failed the test--mostly on questions related to drug use, says William Coors.)

But the 12-page psychological test that has replaced the polygraph has also stirred debate, and prompted a flurry of letters to Denver newspapers.

Denver Post editorial cartoonist Mike Keefe suggested that the written test would probably include such questions as, “Person I’d most like to be stranded with on a desert isle: 1. Jane Fonda 2. Alan Alda 3. George Will.”

Coors officials’ ebullience at the boycott settlement turned to anger when some news organizations reported that the settlement was tantamount to a company surrender. “The news media universally misinterpreted it,” William Coors said.

The deal provided that Coors would “reaffirm” the union’s right to organize the workers, would not interfere with organizing drives and would use unionized contractors on construction projects. The AFL-CIO considered this “one of our greatest victories,” a spokesman said.

But other observers attached less weight to the company’s concessions. “I’m not sure the union got so much out of it,” said Edward Lawler, a professor and labor specialist at the University of Southern California business school. “It looks likes everybody declared victory and withdrew from the battlefield.”

Also still in dispute is how much the credit the boycott deserves for Coors’ stinging loss of market share in the late ‘70s. The union officials have insisted that the boycott was responsible for Coors’ Colorado market share falling to about 22% in 1984, from 47% in 1977.

Many outside analysts, as well as company officials, believe that the declines had more to do with the aggressive tactics of Coors’ competitors. “But it did hurt,” said George Thompson, analyst with Prudential Bache Securities. “Boycotts are not good business.”

The Coors family, now in its fourth generation of managing the company, has come to understand that boycotts are not good business. But erasing the bitter feelings produced by the boycott and protests has not been easy.

“The purpose of the boycott . . . was to put us out of business,” said William Coors. “In this day and age, it’s a sin to be a conservative. There’s somehow something wrong with it.”

William Coors wonders if settling the boycott might not have actually hurt the company’s image with some consumers. “There were people who admired the company’s stand, its independence,” he said. “We may lose their support.”

Few Family Gatherings

Thirty-six Coors family members still live in the valley surrounding the brewery. Joseph Coors’ home is within yards of the plant, screened by a stand of fir; William’s home is atop a neighboring mountain.

The senior Coors family members eat lunch together daily at the Queen Anne-style house next to the brewery that Adolph Coors built for his bride. As a group, the family doesn’t get together more than once a year, preferring, “to go our own way,” says William Coors.

Although the Coors board prides itself on speaking as one, disagreements can be passionate. Peter Coors, who negotiated the boycott settlement, shuttled between the union leaders and the the Coors board 12 times before terms were accepted.

The family, particularly Joseph Coors, became known as financial angels of the New Right in the mid-’70s by funding such new organizations as the Heritage Foundation, the conservative think tank, and the Committee for Survival of a Free Congress, a group organized to advance conservative social as well as political ideas.

Joseph Coors provided seed money for the Heritage Foundation in 1973, and at one time was providing more than half of its budget.

It was also Joseph Coors who, early in Reagan’s first term, pushed for the appointment of such Colorado conservatives as former Interior Secretary James G. Watt and former Environmental Protection Agency administrator Anne McGill Burford.

Members of the Coors family are “not as willing to jump into new projects as they used to be, but they’re still very important,” said Paul Weyrich, the conservative tactician who founded the Committee for Survival of a Free Congress, now called Free Congress PAC. “There was a time you could call Joe Coors up and get him into any new activity.”

Joseph Coors, who declined to be interviewed for this article, “still gets regular phone calls from Ronald Reagan,” Weyrich added.

Peter Coors, a low-key man who usually serves as the company’s good-will ambassador, says that he and his brother may be less outspoken on controversial political matters than their father or uncle. “We may stay out of some turkey shoots,” he said. “But we take our stand, too.”

Peter Coors recently posed in hunting garb and with his rifle for a National Rifle Assn. advertising campaign headlined, “I’m the NRA.” Jeffrey H. Coors, the company president, takes over in October as chairman of one of Weyrich’s groups, the Free Congress Research and Education Foundation.

His association with Weyrich has already generated some bad publicity.

In February, a group affiliated with Weyrich held a conference called “Hope and Homosexuality” in a Washington suburb to advocate that homosexuals give up gay practices. Gays who protested cited Jeffrey Coors as a backer of the conference, although Weyrich says Coors had no connection with the event.

Also politically active is Joseph Coors’ wife, Holly. The daughter of a prominent Main Line Philadelphia family, Holly Coors headed Reagan’s Colorado campaign in 1980 and 1984 and considered running for governor in 1985. On Sept. 14, she filed for divorce from her husband of 46 years. She is expected to remain active in Colorado politics.

If settlement of the boycott and the other image-polishing efforts do help the Coors sell beer, the upswing won’t come too soon.

For years, Coors was a regional brewery that reigned without challenge in 11 Western states. The Coors family members believed that they didn’t need to advertise much to sell a good product--and they were right, since they sold as much as they produced.

“We weren’t in the marketing business, we were in the production and allocation business,” said marketing chief Rechholtz.

Suddenly, in the late ‘70s, however, Coors lost market share across that home region under the pressure of heavy advertising by the big national breweries. The industry’s consolidation was accelerating, and family-owned breweries were being forced out of business or swallowed up by larger competitors.

Coors’ market share in California sank to 14% in the late 1970s from a peak of more than 40%, and declines elsewhere were also sharp.

Such a fall-off can be fatal in the beer business, where brand loyalty is rarely strong. All brewing executives remember how Schlitz, No. 2 beer maker in 1977 with sales of 15 million barrels, dropped from contention within two years, and now sells less than 1 million barrels a year.

Coors decided that the answer was to expand nationally so that it could compete on the same footing as its larger competitors. Next year Coors will have distribution in all states but Indiana.

The company’s sales and marketing staff has been expanded to 464 employees, from roughly 64 in 1978. Last year, Coors spent about $12 per barrel on advertising--more than any major competitor, and about 50% more than Anheuser-Busch.

Coors has found a winner in its Coors Light brand, and some analysts see promise in the company’s 2-year-old Extra Gold, meant to compete with such beers as Michelob. Coors Light’s sales rose 18% last year over 1985, making it the fastest-growing major brand.

Coors’ balance sheet is solid, since the company, following the tradition of patriarch Adolph, does not borrow. (The founder, nearly wiped out in a flood, had to borrow from Denver banks to rebuild, then carried crushing debts through much of the Great Depression. Adolph vowed never to borrow again.)

But Coors is still waiting for the payoff from its expansion strategy.

The company’s overall market share is still slightly above 8%, analysts say, only slightly higher than its position five years ago. Coors Light’s growth has come partly at the expense of Coors regular beer.

Expansion costs have eaten into profits. While earnings rose 11% last year to $59 million, the company has made more money in five of the last 10 years.

Coors has decided recently to revamp its 2-year-old advertising campaign, which used actor Mark Harmon to try to convey the product’s wholesome qualities.

Some analysts say the campaign was oriented too much toward consumers in their 30s. “They’ve been going after the earth-shoe-wearing, granola-eating crowd that loved them in the ‘70s,” said Paul Gillette, publisher of the California Beverage Hotline newsletter. “But the fact is, younger people drink more beer.”

The company will rely on newer drinks to provide for some of its growth over the next few years, executives say. After cutting back ad support for George Killian Irish Red, an ale, Coors is now increasing spending; the company may also finance a big campaign to promote a stout-like beverage called Winterfest that has done well in test marketing.

The goal, says marketing chief Rechholtz, is to seize a 15% share of the market and thus gain the “critical mass” needed for more growth. “And when you get to the No. 3 position, that puts you in good position to move to No. 2.”

Nervous at the slow growth of the beer industry, Coors has also sought to diversify into several other businesses, including ceramics and oil and gas. But while these operations now account for more than one-fifth of sales, last year they lost the company $330,000.

William Coors admits to more reservations about the beer industry’s growth prospects, citing the nation’s aging population. “If Adolph Coors Co. became an energy or ceramics company with a brewery division,” he said, “that wouldn’t bother me at all.”

Coors Family Album

Adolph Coors, 1847-1929, stowed away from Prussia to America, saved his money and founded a brewery in 1873 in the gold-mining town of Golden, Colo. His death after a fall from a Virginia Beach, Va., hotel room window, was ruled an accident. Some speculated at the time that Coors may have jumped, or been pushed. Since then, the company has been run by his son Adolph Jr.; and then by Adolph Jr.’s three sons--Adolph III, William and Joseph.

William K. Coors, 71, chairman and chief executive of Adolph Coors Co., took over the top position in the 1950s. In 1959, his brother Adolph III was killed by kidnapers in Colorado seeking a ransom. Bill Coors is considered in the industry to be an expert in brewing techniques.

Joseph Coors, 70, Coors vice chairman, is the most well-known of the Coors family in the political world and is a member of Ronald Reagan’s informal “kitchen cabinet.” Three of his sons--Jeffrey, Peter and Joseph Jr.--represent the fourth generation of Coors family members to run the company.

Jeffrey H. Coors, 42, is company president. He and brother Peter are in charge of day-to-day operations but regularly consult Joseph and William Coors.

Peter H. Coors, 41, is president of Coors’ big brewing division. He led efforts to negotiate an end to the boycott through two years of talks. An outgoing man, Pete Coors and his brother Jeff act as the company’s ambassadors to community groups.

Joseph Coors Jr., 45, oversees some of the brewer’s key efforts to diversify. He is president of Coors Ceramics. The company makes a range of products: ceramics materials used in computers, aerospace, and other industrial operations; laboratory ware, and dental crowns.