Molson Coors Beverage Company in Decline

Molson Coors Beverage Company in Decline

Molson Coors Sales Dip to Nearly $10.6 Billion in 2019

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Molson Coors Beverage Company reported nearly $10.6 billion in net sales for 2019, a decline of 1.8% compared to 2018.

In a press release, Molson Coors president and CEO Gavin Hattersley called 2019 “a challenging year” for the company.

“However, despite significant headwinds and continued volume declines, we grew NSR/HL [net sales revenue per hectoliter] and improved our mix, delivered strong free cash flow and cost savings, reduced our debt, and started making progress toward premiumizing and modernizing our portfolio,” he said.

Restructuring and Revitalization Plan

In October, the company announced a restructuring and revitalization plan aimed at reinvesting $150 million in its core products, above premium offerings and beyond beer innovations. The plan resulted in the restructuring of the company’s business operations from four units to two (North American and Europe), the elimination of its Denver headquarters and the elimination of hundreds of jobs.

“The plan is designed to streamline the company, allow us to move faster, and free up resources to invest in our brands and capabilities,” Hattersley said in the release. “As promised in October, we’ve wasted no time in implementing the plan.”

Since that time, the company has also announced plans to shutter its manufacturing facility in Irwindale, California, and the planned acquisition of Detroit craft brewery Atwater Brewing Company.

In 2019, the company’s total volume declined 3.5% worldwide, but net sales per hectoliter increased 2.4%, to $114.10 per barrel, which the company said was “driven by positive global net pricing and mix benefiting from our continued focus on premiumizing our portfolio.”

In Q4, Molson Coors posted $2.5 billion in net sales worldwide. Volumes declined 1%, due to declining volumes of economy-priced products in the U.S. and poorer than expected sales in Canada.

In the U.S., Q4 shipments (sales to wholesalers) increased 2.5%, which the company attributed to “cycling lower shipments in the prior year” due to “quarterly timing of distributor inventories, partially offset by lower brand volume.” Net dollar sales increased nearly 5% due to increased sales of premium offerings and higher pricing. However, overall volume declined 1.7% due to decreased sales of the company’s economy offerings.

The comparative quarter, Q4 of 2018, had marked declines for sales and volume. In that period, the company posted net sales declines of 7% in the U.S. Shipments declined 8.9% while depletions declined 5.1%.

Marketing expenses declined 6.8% in Q4 due to a shift in spending from Q4 to Q1 of 2020, which included a regional advertising buy during Super Bowl LIV for the company’s Saint Archer Gold brand.

Shipment and depletion volumes for the full year were not made available.

Vizzy Launch and Lawsuit with Brizzy

During a conference call for investors and analysts, Hattersley discussed new product innovations such as Vizzy Hard Seltzer, which is set to launch in late March despite a lawsuit claiming the product infringed on the trademark of Brizzy maker Future Proof. Hattersley called Vizzy the company’s “biggest bet yet in the hard seltzer segment,” which is projected to be $TK billion in 2020.

Vizzy positions itself as the first hard seltzer with antioxidants from vitamin C, which it derives from acerola cherries.

“There’s no reason to believe this isn’t going to resonate very well with consumers, particularly that 25- to 39-year-old male and female that choose to drink but are looking for potentially better choices,” Hattersley said.

Molson Coors plans to support the launch with a “robust campaign” that includes buys on television and social media, digital advertising and out-of-home advertising. Thus far, the brand has received an “excellent response” from wholesalers and retailers, Hattersley said.

“There is a lot of excitement and anticipation for this brand, so we’re excited about it,” he added .

Asked if Molson Coors would explore hard seltzer line extensions for its core light beers, as competitors Anheuser-Busch InBev and Constellation Brands have done with the Bud Light and Corona brands, Hattersley said no.

Marketing Successes

Those core light beers — Coors Light and Miller Lite — posted positive quarters, which Hattersley credited to advertising campaigns for both.

Coors Light’s “Made to Chill” campaign in Q4 resulted in the beer’s best quarter of depletions since the first quarter of 2017.

“We’re going to invest meaningfully behind this platform in 2020,” Hattersley said. “It’s brought relevance back to the brand again, it’s back in the lives of new legal-drinking-age consumers. It’s back in the cultural landscape. Its momentum is hitting in the right direction. We’re just getting started.”

Miller Lite’s latest iteration of the “Miller Time” campaign delivered the beer’s best quarterly performance in the U.S. since 2014 and double-digit growth in Canada.

The company is also investing in marketing for its Italian import label Peroni and new innovation products such as Blue Moon’s Light Sky, a low-calorie low-carb wheat beer brewed with tangerine peel, and Saint Archer Gold.

“We believe everything we’re doing in 2020 is setting ourselves up for sustainable growth,” Hattersley said.

Other Molson Coors News

In other Molson Coors news, the company last week filed a lawsuit against Berkshire Hathaway’s BNSF Railway Co. and other rail freight carriers in Washington federal court, alleging that the companies charged billions of dollars in fictitious fuel surcharges, according to Bloomberg. BNSF and other defendants denied the allegations.

The new corporate identity for Molson Coors Beverage Company

The new corporate identity for Molson Coors Beverage Company

The company also debuted a new corporate logo that reflects the company’s new official name as of January 1st — Molson Coors Beverage Company — “speaks volumes about who we are and what is possible for our business, signaling to our employees, our customers, investors and others that we are serious about growing beyond beer,” Hattersley said.

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