Molson Coors plans to 'aggressively address' flat North American sales
- Molson Coors is "aggressively addressing" volume declines in its important North American market, the company said in a statement. U.S. brand volume decreased 4.8% for the quarter, primarily driven by lower volume in the Premium Light segment. Sales in the U.S. fell 3.1% to $2.073 billion.
- The beer maker said total net sales fell 0.2% from a year ago to $3.09 billion. Net income soared 28.6% to $424.1 million as the company benefited from cost savings, lower marketing expenses and a lower tax rate. Globally, worldwide brand volumes fell 2.4%.
- In a separate release, Molson Coors said its Canadian unit has formed a joint venture with Hydropothecary Corp. to develop non-alcoholic, cannabis-infused beverages for the Canadian market. Molson Coors Canada will have a 57.5% controlling interest in the new company.
Molson Coors' latest earnings report reflects the ongoing challenges facing major beer producers throughout the United States. AB InBev last week said revenues in the U.S. slipped 3.1% during its most recent quarter as power brands Budweiser and Bud Light continued to lose market share.
While Molson Coors posted strong growth in Europe and other international markets during its quarter, it wasn't enough to offset challenges it is facing in the U.S. and Canada, where consumers are shunning brands like Miller Lite and Coors Light. The U.S. is by far the largest market for Molson Coors, making up roughly two-thirds of its sales. For Molson Coors to return to growth, the company needs to improve its operations there — something the company's CEO said is "aggressively" being done as part of a broader review of its North American business. The company did not go into detail as to what those steps might be.
The major beer producers are facing threats on several fronts as Americans move away from domestic lagers in favor of Mexican imports, craft beers and wine and spirits. A growing number of consumers are also turning to low-calorie and no- or low-alcohol brews as part of a broader health and wellness trend sweeping the food and beverage industry. Increasingly, beer makers are turning to other avenues for growth.
Molson Coors' joint venture in the cannabis-infused beverage space, which follows a similar initiative last October by Constellation Brands, is one such example. While the partnership focuses on Canada, where marijuana will be legal starting Oct. 17, it could lay the groundwork for a rollout in the U.S. depending on what happens with state and federal laws. Molson Coors would almost assuredly have perfected a product and learned how to market it to consumers after doing so in Canada well before it comes time to introduce it to American drinkers.
In addition to marijuana, MillerCoors also has introduced a new light beer called Two Hats in lime and pineapple flavors. It has a tagline of "Good, Cheap Beer" and quirky ads to appeal to millennial drinkers who are less status conscious and more budget conscious. It also has added craft players to its lineup and expanded its reach into other beverages after purchasing Aspall Cider, a nearly 300-year-old maker of premium ciders and specialty vinegars.
Molson Coors is likely to continue expanding its business beyond its traditional operations with similar deals. It could also roll out more beer products that cater to organic and low-calorie trends, or turn to a merger with a company like Heineken to expand its reach globally and reduce its North American dependence. But for now, correcting the volume declines facing its core brews here should be its primary focus — a daunting task that Big Beer companies have yet to figure out how to solve.
- Molson Coors Molson Coors Reports 2018 Second Quarter Results
- New Cannabis Ventures Molson Coors to Form Cannabis Beverage JV with Canadian Producer Hydropothecary
Follow Christopher Doering on Twitter