This column was originally published on RealMoney on July 14 at 12 p.m. EDT.

Sometimes you just have to tip your cap to the ingenuity of the trading community. And the occasion of rumors of a deal between the National Hockey League owners and players' union is one of those times.

It didn't take much longer than the sound of a slapshot for clever traders to start bidding up the beaten-down shares of Canada-based brewer

Molson Coors

(TAP) - Get Report

on Wednesday as word of an agreement hit the ice. The stock, which had traded as high as $79 in April before falling to $57 in June, was bid up as high as the mid-$60s.

For those of you who weren't paying attention, the entire 2004-2005 NHL season was canceled because of a contract dispute, and apparently beer sales in the Great White North suffered. In a note to clients, Merrill Lynch analyst Christine Farkas said Canadian beer volumes fell 2.8% in 2005 through April, vs. a rise of 2.3% in the same period in 2003. She said that while sports venues represent only 2% of total beer consumption in Canada, bars and taverns where games are watched represent 18.5% of total consumption.

Farkas went on to point out that during the 2003-2004 hockey season (which runs from October to June), beer volumes in Canada rose 0.7%. In 2004-2005, beer volumes slipped by 1.8%. There could be many alternative reasons for the decline, of course, such as a broad shift in tastes to cocktails and wine, but still you can see why the news of an NHL deal brought some froth to the market.

After the excitement subsides, however, the bubbles might drift away, as Molson Coors faces some serious headwinds. Consumers are generally spending less money on beer everywhere in the world, and that has led both to price wars and an increase in marketing costs. Molson Coors executives blamed cold weather in addition to the canceled NHL season, as well as new laws banning smoking in taverns in several markets.

But they shouldn't just blame Canada. The beer market also fell by 2% in the first quarter in the U.K., where the company owns the top-selling Carling brand, and a little more than that in the European Union, where it markets the Grolsch brand. Moreover, Merrill Lynch reports that Molson's investment in Brazil -- particularly through leading brand Kaiser -- is going flat, as sales fell by 7% there in the first quarter. In fiscal 2004, Molson's sales volume in Brazil sank 17.5%.

Molson Coors is the fifth-largest brewer in the world in terms of volume, but a key problem is that it doesn't dominate in any single area. In the U.S., that means it needs to slug out share of a generally declining market, while in its home country, as well as in Brazil, it has to battle with

Companhia de Bebidas das Americas



Much of the bad news has already been priced into Molson Coors shares over the past quarter, and there could be some positives ahead. For one thing, the company should probably give up on Brazil, and any inkling that it will divest its holdings there would boost shares. Also, brewery analysts have always considered Coors to be an inefficiently run operation and are looking for Molson to tighten down its logistics and overhead, which would also help the stock. And executives have proven that they can manage a successful acquisition in Carling, so many are willing to give them the benefit of the doubt going forward with the Coors purchase. Also, despite its problems, Coors sales in the U.S. have been improving -- about 7% annually in the past couple of years.

The bottom line is that despite near-term optimism over beer sales in a revived hockey season, Molson Coors has a lot of serious issues to battle in the near term. Many traders may elect to take the recent pop and run.

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Jon Markman, writer of Value Investor, is the senior investment strategist and portfolio manager at Greenbook Investment Management, a division of Greenbook Financial Services. Separately, he is publisher of StockTactics Advisor, an independent weekly investment research service. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback;

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