Start of:

CEO Interview with
Tom Farrell, CEO
Dominion Resources...

Jim:      Mr. Swinburn, welcome to Mad Money...

Peter:    Hi Jim, how are you?

Jim:       I don’t know, when I read that people aren’t drinking as much beer, it calls into question the basic human nature. Are we really in a moment where people will have fewer Coors, because they are worried about their paycheck and tax increases?

Peter:    Just for the record, our volumes are actually up in ’08, so we weren’t in the same bag as ABM Bev. And we have generally been finding in the markets, pretty developed markets, that outside of the UK, the business is pretty resilient is what we are finding.

Jim:       Well then why not pay a bigger dividend. Because you have got huge cash flow, you have got great management, and it is pretty much given even in this tough time that you have volume growth. How about returning more to the shareholders?

Peter:    Yeah, it is an option that we keep under review on a constant basis. You know we will have cash generated next year, we are looking forward to that. On an ongoing basis we do exactly the same, we look at the best way to use that cash, and the best way is always to try to get the best return for the shareholder. So if you look at the backend of last year, we put $100 million into a pension fund, one of our pension funds in the UK. And given the equity markets, given the fixed income markets, to us it was a pretty good investment. It should give long term mid single digit plus returns to investors. Plus we get the tax benefit on that. We are using money. We will decide at which point is the way to use that money

Jim:       I hear and read from the call this morning that Bud, I am holding up a can of Bud right now, I know you can’t see it… is spending less… I start to think media prices are going down… you guys dominate, and I love those ads, during the NFL where you get the coaches talking but they are not really talking… is this an opportunity for you to start taking some share against a beleaguered Bud that seems to be run by people that don’t understand, at least in my view, the American beer system?

Peter:    We have put Miller and Coors to create the second biggest beer company in the US, and that is really doing well. And that is really what we are focused on. So we announced yesterday increased spend on the Miller Light Brown, and getting Miller Light and Coors Light singing together, the light beer market in the US accounts for 50% of the market. So if you get the light market right you get the market right. Coors Light has been growing now for 15 consecutive quarters. Getting Miller Light right as well, and we are putting a lot of money behind that, really is what we are trying to achieve in the market. And we are pretty sure that we are going to be successful.

Jim:       Okay, I am holding up a Keystone and a Coors… we have a can here and the price of that metal has come down… we have a bottle here, the price of the bottle has come down… we have ingredients that are I think cheaper than last year. Are we looking at the possibility of a second half, having dramatically year over year cost declines in the commodities that it takes produce beer.

Peter:    Yes, like most companies we hedge to even out any volatility. So we benefited on the inflation rise, and we will take something of a hit coming down the other side. It won’t be dramatic, but we will see benefits coming thru in tunes of input inflation towards the second half of the year, undoubtedly.

Jim:       We have become very tax happy in the country because we have a lot of deficits, a natural thing for a President might be, or a governor, might be to slap on a .50 cent per case beer tax. Are you worried?

Peter:    Yeah, it is something that we watch out for. And the main reason we watch out for it is just about the consumers. I mean consumers are strapped already, and putting more tax on them for whatever source, especially for excise just doesn’t work.

Jim:       Yeah, I agree with you. Now when I go to a bar, am I going to, are the American people or wherever your markets are, are they trading down? Are they buying less expensive beer?

Peter:    It is like most industries, you get a variation across the piece. But if you look at the North American markets, pretty reversed. I mean we are seeing trading down from spirits and wine into beer, but the beer market is trading down as well. But the overall market is reversed, and we announced coming into the new year we saw volume increase in January in the US market, and which we are very pleased about following on the price increases that we dropped at the back end of the quarter.

Jim:       Do you think there is a chance one day you will have 50% share of this market?

Peter:    You know we put Miller and Coors together, sorry the Miller business and the Coors business together to produce the best beer business in the US, and that is our aim.

Jim:       So again though, do you have a chance to take dramatic share here now that Bud is with In Bev, and that company seems to be reeling a little bit?

Peter:    I come back to the same point Jim, it is really about getting your grounds working for you effectively. And we have got work to do with Miller Light, and we are on the road for that. Coors Light is doing exceptionally well. We have got a brand called MG64, which is a low-carb, low calorie brand which is doing exceptionally well. Those three brands together could have a real impact on the light beer market. And we are convinced that they will.

Jim:       Excellent, Peter Swinburn, CEO of Molson Coors, thank you very much sir for coming on Mad Money.

Peter:    Thank you.