Molson Coors is to make changes at its Brazilian subsidiary Cervejarias Kaiser. The newly-merged company said yesterday (18 May) that, following a recent board meeting, it had been decided that it will reduce its cash commitments and review options for future development at Kaiser

The company said that it continues to see Brazil as a valuable beer market with potential for long-term growth, but has decided to rein back investment by operating the business on "at least a cash break-even pace, on an operating basis," while exploring a range of options for the development of the business. From a strategic standpoint, it is looking to compete in Brazil not only with the Kaiser brand but also possibly with its flagship Coors Light brand.

"While we have a strong and energised Brazilian team in place that's eager to win, and making solid progress month to month, we are unwilling to make further cash investments in Kaiser without greater certainty that it is a viable, long-term platform to compete effectively in Brazil," Leo Kiely, president and CEO of Molson Coors, said.

"So, starting immediately, I have instructed our management team to do two things," Kiely continued. "The first is to operate the Kaiser business on at least a cash break-even pace, on an operating basis. With the recent improvements in the business, we think this is achievable. The second is to explore a full range of options for Brazil. We want to be in the Brazilian market, but only on a winning basis, and not at the current risk level."

The company said that, despite losses and slightly lower volumes over recent months, Kaiser had made "considerable progress" and produced improved financial results. In the four months to the end of last month, Kaiser experienced negative cash flow from operations of US$3m, compared with cash use from operations of US$22m for the same period in 2004.