- Molson Coors will cut between 400 and 500 jobs as the beer maker struggles with lower demand for its brews, especially in its key U.S. market, the company said in a statement.
- Molson Coors also plans to streamline its corporate structure into two business units — North America and Europe — from four previous business units. It will close its Denver office, designating Chicago as its North American operational headquarters.
- The company will change its name in January to Molson Coors Beverage Company "to better reflect its strategic intent to expand beyond beer and into other growth adjacencies," the statement says.
After another quarter of falling demand for its brews, Molson Coors has come to the realization that it can no longer continue forward with the status quo. In a series of announcements covering everything from job losses and corporate consolidation to which beverages are investment priorities going forward, the beer company seems to acknowledge there are no sacred cows as it struggles to find a way to fix the company.
"Our business is at an inflection point," Gavin Hattersley, Molson Coors' CEO, said in the statement. "We can continue down the path we've been on for several years now, or we can make the significant and difficult changes necessary to get back on the right track."
Financial results from the company's most recent quarter — also released Wednesday morning — make clear some of the challenges that continue to plague Molson Coors and other beer companies with major presences in the U.S. and North America overall. During its third quarter, Molson Coors said sales in the U.S., which accounted for 67% of its $2.8 billion in revenue in the period, fell 2.3%.
Molson Coors appears to realize its current operations are too big in relation to demand for its products, or they are simply not efficient enough. By cutting jobs, consolidating its North American operational presence to Chicago and reducing its business units by half, Molson Coors could become a more nimble organization that can respond faster to changing consumer demands.
The company says it expects to record $120 million to $180 million in charges tied to the job cuts and other changes announced on Wednesday.
In addition, Molson Coors is doubling down on investing in non-beer options, a realization this segment is the best path for growth. After launching two portfolio firsts in 2019 — a canned wine and a hard coffee — Molson Coors said it will continue to invest more in these kinds of "whitespace opportunities" and in growth beyond the beer category. The company has been on that road recently. In the past few years, it has purchased Clearly Kombucha, bought Aspall Cyder and took a minority stake in Bhakti, a Colorado-based maker of nonalcoholic RTD chai tea.
Still, Molson Coors remains tied to beer — its new company name still honors the two iconic brews — but adds the "beverage" moniker to underscore its broader reach into other drinks. For a company that gets the lion's share of its revenue from beer, it cannot simply abandon the segment altogether.
Molson Coors also said it will spend significantly in "above premium," the fastest growing area of the beer industry. This will come through added investments in existing brands, innovations and potentially acquisition of other brands. In addition, Molson Coors said it is modernizing manufacturing and will invest several hundred million dollars into its brewery in Golden, Colorado. The company also plans to focus on bringing beverages to market faster — from 18 months now to as little as four months soon — and expanding a “test and learn” approach, evaluating market potential for products and quickly scaling up.
As consumers gravitate away from beers their parents drank in favor of more creative and craft options, Mexican imports, wine and spirits, and new categories such as hard seltzers and ciders, Big Beer makers have increasingly found themselves on the outside looking in. Nearly all of them have all invested in craft, hard alcoholic beverages and CBD — including Molson Coors. Those investments are either not at the stage where they can have a meaningful impact — especially in the nascent CBD beverage market — or are not producing enough in revenue now to offset the drop in beer sales.
Molson Coors 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.
The restructuring makes a bold statement that its new CEO means business. Hattersley just took over from Mark Hunter, a beer industry veteran, September 27. Hattersley has worked with brands now affiliated with Molson Coors since 2002. It's been mostly in financial capacities, so he likely has deep insight as to what challenges the shift away from its classic beers brings to the bottom line.
As today's announcement shows, Hattersley is not afraid to make changes at the $11.5 billion company — an action others in the beer industry could be wise to emulate.