- Molson Coors President and CEO Mark Hunter announced Wednesday he would retire on Sept. 27, according to a company statement. He will be replaced by Gavin Hattersley, who has been the head of the company's U.S. business unit, MillerCoors, since 2015.
- Hunter, 56, said he wanted to spend more time with his wife and children, according to the release. He's been in the beer industry for 30 years, and has worked with Molson Coors since 2002. In his tenure, he was part of Molson's acquisition of UK brand Carling, the Molson Coors merger, the formation of MillerCoors and acquisitions of international business.
- Hattersley, also 56, has long experience in the beer business. He has worked with brands now affiliated with Molson Coors since 2002, mostly in financial capacities. Before heading MillerCoors, he was the company's chief financial officer for seven years, also serving as executive vice president for four of those.
Why is a 56-year-old CEO with a storied career at one of the world's largest brewing companies suddenly retiring? Here's what he said after his departure was announced, according to a transcript of Wednesday morning's earnings call.
"As we now shift emphasis to greater focus on top line growth while remaining financially disciplined, it's an appropriate time for me to pass the baton on to Gavin to lead the company through our next chapter of continuing to energize, premiumize and modernize our portfolio and to move beyond beer with disruptive thinking," Hunter said.
Molson Coors' other news Wednesday — its second quarter earnings — was not so great. Compared with the same time last year, sales were down 4.4%, with net income slipping 22.3%. In the U.S., the company's key market with nearly 70% of sales, revenue decreased 2.9% to $2.012 billion. Worldwide, brand volumes were down 5.6%. Net cash from operating activities during the last six months was down $469.8 million compared to a year before.
"After a solid start in the first four months of the year, May and June were challenging, reflecting unfavorable weather and weak industry demand across our major geographies, resulting in a disappointing volume performance in the quarter," Hunter said in the earnings report.
He touted the company's new efforts in product innovation and premiumization, its Coors Light "Made to Chill" marketing campaign and its planned launch of Truss cannabis-infused nonalcoholic beverages in Canada. Investors didn't share the enthusiasm. The company's stock fell to a 52-week low of $51.80 on Wednesday before recovering some of its losses throughout the day. It was up 20 cents to $54.19 on Thursday morning.
With Hattersley, Molson Coors is elevating an expert in the companies' finances into the top slot. Someone with this expertise could really help the company, which has seen revenues and volumes slipping over time.
However, these financial challenges are not unique to Molson Coors. Consumers are moving away from traditional beers in favor of alcoholic seltzers, cocktails, beer and wine. According to the Beverage Information Group's 2018 Beer Handbook, U.S consumers have been drinking less beer each of the last five consecutive years. This is especially bad news for a company such as Molson Coors, which mostly owns legacy beer brands including its two namesakes, Blue Moon, Miller, Milwaukee's Best and Leinenkugel. Only a few of its brands — including Henry's Hard Sparkling, Crispin and Zima — are non-beer beverages.
Regardless of the slowdown in the beer market, Molson Coors has had financial issues of its own to deal with. The company announced in February it was restating results from 2016 and 2017. While the restatement was not material and came from accounting errors from the acquisition of MillerCoors in 2016, the brewer's deferred tax liability and expenses increased $399.1 million. While it didn't have any impact to shareholders, the restatement was another black eye on the company's finances.
Hattersley was optimistic on Wednesday's earnings call, but will a new CEO be able to make a difference? As many food and beverage companies have seen their stocks take a hit, they have used this same strategy. In the last two years, Kraft Heinz, Dean Foods, Unilever, PepsiCo, Mondelez, Kellogg, TreeHouse Foods and Campbell Soup have found new leaders. Even the lead CPG trade group, the Grocery Manufacturers Association, recently replaced its CEO.
As many of these leadership changes are too recent to see big trends, they do tell investors that the company is aware of its need for a turnaround. Heading a large company is a difficult job without much security. According to statistics cited by Harvard Law School in 2017, the average CEO at a large company lasted five years. Corporate governance experts have said that the easy access to information on companies today tend to make boards more responsive to big shareholders and the public — and less loyal to any CEO. Today's CEO often bears the brunt of anything bad happening at the company, as many former Big Food executives can attest.
Is a new CEO the answer to Molson Coors' problems? It depends on the direction Hattersley wants to go. As a longtime company executive, he's familiar with the company and its challenges. With his deep background in finances, he can ensure the numbers add up properly and find inefficiencies. He's also intimately familiar with the challenges facing the company in its key U.S. market during his time heading the unit there, potentially giving him immediate insight into how to go about fixing it — though as nearly all big brewers have found, it's proven to be an uphill climb.
Finances are important to the company's future, but so is innovation. And with Truss — the company's joint venture with Hexo to produce nonalcoholic cannabis-infused beverages — that innovation could be around the corner. As cannabis beverages will be fully legal in Canada in December, Molson Coors will be ready to take advantage of a market that Hunter has estimated could be worth $1.5 billion.