Coors Brewing Company has announced plans to add brewing capacity to its existing beer packaging facility in Elkton, Va., by early 2007. The Virginia plant, which currently has no brewing capability, would then have the ability to brew between 6m and 7m barrels of beer annually, roughly equalling the facility's current packaging capacity. The expansion will follow the successful completion of detailed engineering studies that the company anticipates completing by the end of 2004.

In a statement, Leo Kiely, CBC president and chief executive officer, said: "We plan to invest between US$160m and US$190m over the next three years to build one of the most modern, efficient breweries in the world here in Virginia.

"This investment will yield annualised cost savings of approximately US$25m through reduced freight and improved efficiency, along with additional one-time financial benefits. This is part of Coors' long-term strategic commitment to reduce our costs by US$5 per barrel over the next 4-5 years. This is separate and apart from the US$175m in synergies Molson and Coors have committed to achieve in their pending merger of equals.

"This new brewery should provide adequate brewing capacity for the company's operations for the foreseeable future. We anticipate that this build-out will achieve significant savings and financial returns, and bring brewing capacity much closer to our important East Coast markets and distributors."

"Coors has been an exemplary employer in the Shenandoah Valley for 17 years," said Mark R. Warner, Governor of Virginia. "This expansion project confirms that Virginia is a leader in the food processing and beverage industries. I am pleased that the Commonwealth is playing an active role in making the Elkton site one of Coors' critical US operations."

Kiely noted that the new Virginia brewery investment would increase Coors' annual capital spending by between 10% and 15% from 2005 to 2007, versus the US$240m total for 2003.