- Molson Coors posted revenue of $2.93 billion during its third quarter, an increase from $2.88 billion a year ago, and topping expectations of $2.92 billion from FactSet. Profit during the most recent period increased to $338.3 million from $287 million.
- Globally, brand volume fell 1% to 25.3 million hectoliters, driven by declines in the U.S. and Canada, but partially offset by improvements in Europe and other international markets. In the U.S., Molson Coors said net sales rose to $1.94 billion from $1.89 billion, with net sales per hectoliter rising 1.2% as higher prices helped offset a negative product sales mix. Brand volume in the U.S. fell 3.3% during the quarter, primarily driven by lower volume in the premium light segment.
- "This quarter reflects progress on a number of fronts as we drive our consistent First Choice strategy of earning more, using less and investing wisely as brand volume grew in developed and developing markets outside of North America," Mark Hunter, Molson Coors' president and CEO, said in a statement. "In the U.S., brand volumes or STRs were below industry volumes. As we have indicated, improving our volume performance in the U.S. is a priority and the first step is to improve our share performance through Coors Light and accelerated premiumization of the portfolio."
Molson Coors appeared to report a rather upbeat quarter when placed in context of the challenges the broader beer industry continues to face in the United States. Still, while the manufacturer of Miller Lite, Coors and Blue Moon said sales in the U.S. rose 2.3% during the third quarter, the increase was largely the result of price increases because overall beer volume declined.
Molson Coors did benefit from sales outside North America, but the U.S. is responsible for roughly 65% of the company's sales, making it imperative that the brewer improve its operations domestically.
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. Total beer shipments declined 1.3% in 2017, led by sharp drops among flagship products including Coors Light (-4.1%) and Miller Lite (-2.8%).
The challenges facing Molson Coors are also impacting its top competitor AB InBev, which arguably is in worse shape because it holds roughly 40% of the U.S. market. Just last week, AB InBev said sales to both retailers and wholesalers declined 0.5%, but overall revenue grew 1.5% as the company benefited from the sale of more premium brews.
Molson Coors and AB InBev both highlighted success they are having in the premium space, and while they will continue to bulk up their presence here, they can't lose sight of the fact that their legacy brands need to be big revenue drivers to their bottom line. The challenge, of course, is how to rebuild the category in a big enough way to return it to growth.
Perhaps for now, stopping the decline is the optimal goal.
The decision in August by MillerCoors, part of Molson Coors, to end production of Two Hats just six months after it was launched, highlights the obstacles brewers face. The beer giant partnered with social media-savvy brands including College Humor, Snapchat and YouTube to market the brew, which was meant to draw younger consumers away from wine and spirits.
"We believe industry growth requires healthy brands across all segments, and we won't stop trying to be part of the solution to grow beer," MillerCoors executives Bryan Ferschinger and Kevin Doyle said in a blog post. "At the same time, right now we simply cannot get to profitable growth without significant improvement in Coors Light and without gaining a bigger piece of [the] above premium [segment]."
To be sure, Big Beer is looking outside the category for pockets of growth. Molson Coors announced in August that its Canadian unit has formed a joint venture with Hydropothecary Corp. to develop non-alcoholic, cannabis-infused beverages for that market. 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.
These are important areas for beer makers to enter as they offer a portfolio that caters to changing consumer tastes and what is expected to be greater acceptance for marijuana-infused products in North America. But these are long-term solutions, meaning for now the majority of the focus will be need to be on mending the wounds plaguing the bigger beers that have defined the space for decades.