Adolph Coors Co. said yesterday it plans to build a $70 million beer packaging plant in Rockingham County, Va., as part of its strategy of becoming a national brewer by 1990.
Coors, the nation's fifth-largest brewer, said the plant is the first step toward construction of a second brewery outside its Golden, Colo., headquarters. Current sales trends and expansion plans indicate that a second brewery eventually will be needed on the site, perhaps within five years, Coors said.
The year-long construction project is scheduled to begin early next spring on Coors' 2,235 acres of land in the Shenandoah Valley, about 15 miles east of Harrisonburg, Va.
The company plans to ship its beer in refrigerated railcar tanks from Golden to be packaged in kegs, cans and bottles at the new facility, beginning in the spring of 1987.
Coors is working to broaden its product line and expand its market territory beyond its western roots, said Peter Coors, president of the company's brewing division.
The company has introduced a low-calorie beer, Coors Light, and is test-marketing two new products, Coors Extra Gold and Colorado Chiller. Extra Gold is a richer beer than regular Coors, and is expected to compete with premium beers such as Budweiser and Miller High Life. Colorado Chiller is a malt-based, citrus-flavored beverage that is expected to compete against wine coolers.
Coors was available only in 11 western states as recently as 1974. Since then it has expanded its market to 44 states and the District. Coors is not sold in Michigan, New York, Indiana, Pennsylvania, New Jersey and Delaware, a potential total market of 40 million barrels a year.
"We are extremely pleased to begin this project," said Jeffrey H. Coors, president of the company, in a statement about the new packaging plant. "It not only strengthens our operations by providing shipping efficiencies and the additional packaging capacity we need, but also puts us even closer to our goal of becoming a national brewer by the end of the decade."
Coors' net income increased 15 percent to $27.8 million in the first half of 1985, from $24.1 million in the first six months of 1984. Sales climbed to $596.8 million from $501.9 million.
Production estimates for 1987 call for continued increases, which would push the company to the limits of its packaging capacity in Colorado, the company said. The Virginia packaging plant is "designed to accommodate a brewery, should the need arise," the company said.
The company expects to sell 14 million barrels of beer this year, still comfortably below the Colorado brewery's production capacity of 18 million barrels. If sales grow as expected, Coors plans to build a 10-million-barrel-a-year brewery in Virginia, Peter Coors said. The plant would be "highly automated" and would be constructed in phases, at an estimated cost of $500 million to $600 million, he said.
The Virginia packaging plant is expected to create about 230 jobs. Coors said it chose the site because of the quality of the water. "We discovered an exceptional source of pure spring water in the Shenandoah Valley that matched the quality of the Pure Rocky Mountain Spring Water in Golden," Peter Coors said.
The company estimates that the new facility could generate about $18 million for the local economy during the construction phase and the first year of operation.
Coors makes six different products, which are packaged in bottles and cans of different sizes, some of which are labeled differently according to various state laws. With all of these variables, the plant will have to produce 238 different packages, the company said.
Coors said it does not plan to seek outside financing for the facility.