By Tripp Mickle 

MillerCoors LLC has a problem: It hasn't named a new CEO.

It's the latest sign of trouble at a joint venture formed seven years ago to create a more formidable No. 2 in the U.S. to global giant Anheuser-Busch InBev NV., which then had about 49% of the market. (It now has 45%.)

The venture fused the U.S. operations of SABMiller PLC and Molson Coors Brewing Co. By combining freight logistics, marketing, production and procurement, it was able to wring about $1 billion out of costs, driving profit increases for six years straight. Now, though, much-needed investments in marketing and IT are undermining those cost savings.

While MillerCoors profit rose 2.9% last year to $1.33 billion, it reported one of its worst quarters ever in February, and warned on an earnings conference call that it doesn't expect margin improvements this year. Profit declined 12% in the fourth quarter from a year earlier, when earnings had risen 30%.

And then there is the CEO seat. The venture's current CEO, 56-year-old Tom Long, told the board a year ago that he planned to leave his post, but it had nobody to replace him when it announced his departure Feb. 10. He will depart June 30.

For the past four years, Mr. Long has tried to reverse sinking volumes at MillerCoors, whose market share is 26%. The company has had some success with Miller Lite in recent months but faces increasing pressure from both craft brews and cocktails, whose popularity has soared.

"They're not looking at a great 2015," said Benj Steinman, president of Beer Marketer's Insights. "It's getting tighter as volumes continue to decline. They're not able to increase prices above inflation because their core brands can't sustain it."

The joint venture--with about 8,000 employees and brands including Miller, Coors, Blue Moon, Keystone, Killian's and small labels like Hamm's--was never a perfect match but a marriage of two companies with different styles and agendas. Former employees say the two earned nicknames. SABMiller employees became "the suits" while Molson Coors were referred to as "cowboys." U.K.-based SABMiller is known for its focus on business processes, they say, while Denver-based Molson Coors is family-controlled and steeped in entrepreneurial spirit.

Though the companies split control of MillerCoors 50-50, parent SABMiller derives just 12% of earnings before interest, tax and amortization from the joint venture. Molson Coors, the other parent, depends on the joint venture for 44% of earnings before interest, tax, depreciation and amortization.

That fact led to different views on running the business. When the 10-person board met last year to discuss the joint venture's three-year plan, SABMiller's five members favored a plan to balance the maximizing of profit with reinvestment in the business. Molson Coors' five members, however, wanted higher profits. Ultimately, the board approved a balanced plan, said a person familiar with the board's thinking.

"There were strategic differences, and they became acute the last couple of years, but [boards] are supposed to debate," the person said.

One of the biggest challenges is that Miller Lite and Coors Light, which contribute more than 50% of MillerCoors profits, haven't increased volume simultaneously since 2007. When one thrives, it seems to cannibalize the other. Last quarter, Miller Lite delivered its first volume gain in seven years, but Coors Light, which competes in the same category, posted a single-digit volume decline.

The latest upturn in Miller Lite has energized the company, though. Miller Lite's revival began with a 2013 promotional partnership with the comedy movie "Anchorman 2." The brand temporarily traded its blue logo and cans for its original white can with a blue logo to complement the movie's 1980s setting. Miller Lite sales surged, and the brand permanently reverted to the white cans.

The company hopes to build on the Miller Lite turnaround this summer by overhauling Coors Light packaging to energize that brand.

"The turnaround of Miller Lite is huge," said Don Faust Jr., who runs Houston-based MillerCoors wholesaler Faust Distributing. "There's a sense now you can grow them both."

The continuing threat from craft beer remains real, though. Craft beer has increased its share of the $100 billion U.S. beer market to 9% from 4.2% since 2008, and Mexican beer sales--a missing piece of MillerSHYCoors' portfolio--have gained a 15% share of the $14 billion import market, according to Beer Marketer's Insights.

And even after seven years, the joint venture hasn't been able to integrate the companies' separate ordering systems, which has strained relations with distributors, who say it is cumbersome to have to toggle between the two.

Mr. Long concedes the companies "underinvested" in IT for years and tried to "Band-Aid" the systems together before approving a new system that will be available next year.

The board has been searching since September for Mr. Long's successor.

The process has been slow, Mr. Long said, because the job "requires attributes that are hard to find: knowledge of U.S. consumers, deep understanding of marketing... and appreciation for franchise markets."

MillerCoors spokesman Pete Marino said the company has a shortlist of candidates for the job. He added that the board was as "harmonious" as ever and said the joint venture has delivered record profits while also creating a stronger competitor to AB InBev.

"We know what we need to do to return the company to volume growth," Marino said.

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