The results of Molson Coors’ Q1 in fiscal year 2025 (FY25) were in stark contrast to the first quarter of 2024.
Q1 net sales declined 11.3% year-over-year (-10.4% on a constant currency basis), the company reported Thursday morning. A year ago, Molson Coors reported 10.7% YoY (+10.1% in constant currency) net sales growth in Q1.
The company’s total financial volumes, or sales to wholesalers (shipments), declined 14.3% in the quarter, while brand volume, or sales to retailers (depletions) declined 8%.
In the Americas, Molson Coors’ net sales fell 12.3% (-11.5% in constant currency). Shipments in the region declined 15.6%, “primarily due to lower brand volumes,” with the quarter cycling inventory loading in the first part of 2024 in anticipation of a Teamsters strike, which later became a reality.
Recall, members of Local 997 went on strike in mid-February 2024 at Molson Coors’ Fort Worth brewery, seeking increased wages and benefits. Molson Coors did not halt operations, using “current employees” to backfill striking team members until the strike ended in late May.
Molson Coors’ contract to produce for Pabst expired last year, which also contributed to the latest quarter’s shipment losses, the company shared.
Depletions in the Americas declined 7.4% YoY (-8.8% in the U.S. alone), due to “the impacts of the macroeconomic environment,” double-digit growth comps from Molson Coors’ core brands and one fewer trading day, the company reported.
Additionally, Q1 total enterprise cost of goods sold (COGS) fell 11% YoY, “primarily due to lower financial volumes and favorable foreign currency impacts, partially offset by higher costs of goods sold per hectoliter” (+3.8% YoY). Marketing, general and administrative spend decreased 0.2%, “primarily due to lower marketing investment and favorable foreign currency impacts,” and “partially offset by higher general and administrative expenses as a result of approximately $30 million of integration and transition fees from the Fever-Tree USA, Inc. acquisition,” announced in January.
“The global macroeconomic environment is volatile,” president and CEO Gavin Hattersley said in a press release. “Uncertainty around the effects of geopolitical events and global trade policy, including the impacts on economic growth, consumer confidence and expectations around inflation, and currencies has pressured the beer industry and consumption trends.”
He added: “We are taking actions to help mitigate the short-term challenges in these uncertain times like reducing non-business critical discretionary spend and capital projects while continuing to support the medium- and long-term health and growth objectives of the company.”
In a call with investors and analysts following Thursday’s release, Molson Coors leadership admitted that Q1 was softer than anticipated – a common sentiment shared by other major beer executives.
As a result, Molson Coors has adjusted its full-year guidance.
- Net sales: Low-single-digit decline (previously predicted long-single-digit growth);
- Underlying non-GAAP income before income taxes: low-single-digit decline (previously mid-single-digit growth);
- Underlying non-GAAP diluted earnings per share: low-single-digit decline (previously mid-single-digit growth);
- Capital expenditure: $650 million, plus or minus 5% (previously $750 million, plus or minus 5%);
- Underlying non-GAAP free cash flow: $1.3 billion, plus or minus 10% (unchanged).
The news comes one month after Constellation Brands made downward revisions to its own outlook.
Despite lowered guidance, Molson Coors leadership said they remain confident in the strength of their core brands, and that overall beer category trends will improve later this year.
Year-to-date (YTD) through April 20, beer dollar sales (-2.6%) and volume (-4.3%) remain in the red in Circana-tracked off-premise channels. Trends have remained consistent in the last four weeks (dollar sales -2.8%, volume -2.3%).
In the four weeks ending March 30, Molson Coors’ core brands – Coors Light, Miller Lite and Coors Banquet – had a 15.25% share of total beer volume in Circana-tracked off-premise channels, the company reported. While still above 2022 levels (13.68%), they are below markers from the same period in 2023 (15.58%) and 2024 (15.44%).
Coors Banquet, Molson Coors’ third largest brand in Circana-tracked off-premise channels, is the only brand among the company’s top 10 to record growth YTD (data ending April 20), with dollar sales and volume increasing 16.4% and 13.5%, respectively. Meanwhile, Coors Light (dollar sales -5.2, volume -6.8%) and Miller Lite (dollar sales -5.6%, volume -6.8%) are both in decline.
Trends have weakened for all three in the last four weeks:
- Coors Light dollar sales -5.2%, volume -6.6% YoY;
- Miller Lite dollar sales -5.9%, volume -7%;
- Coors Banquet dollar sales +14.8%, volume +11.7%.
However, Molson Coors leaders believe Coors Banquet’s growth will continue, due partially to distribution gains, as the brand is available in about half of the outlets Coors Light is sold. In Q1, Coors Banquet increased its distribution footprint by 20%, and recorded its 15th consecutive quarter of volume share growth, Hattersley reported.
Hattersley also acknowledged share declines for its craft brand Blue Moon and for its flavored malt beverage (FMB) brand Simply Spiked. In March, Molson Coors shifted Blue Moon from 15- to 12-packs, which “caused quite a lot of disruption from a Blue Moon point of view,” Hattersley said. Meanwhile, Simply Spiked was lapping the 2024 introduction of Simply Spiked Limeade, with 2025 innovations coming for the FMB in Q2 this year, rather than Q1.
In the L4W, Blue Moon dollar sales (-11.4%) and volume (-16.8%) were both down double-digits. Simply Spiked Lemonade variety pack, the largest dollar sales contributor from the FMB brand, recorded even steeper losses (dollar sales -30.2%, volume -30.1%).
Board Considering Internal and External Candidates for Top Spot
Thursday marked Hattersley’s first earnings call since the April announcement that he will retire at the end of 2025. Hattersley has served as CEO since late 2019.
During the call, Hattersley said Molson Coors’ board is evaluating internal and external candidates for his replacement, and that “the top priority is to navigate the process very thoughtfully,” paying attention to “both relevant business and leadership experience” as well as whether a candidate is a “cultural” fit for the company.
“The culture we built here at Molson Coors is very special, and the board is intent on appointing a new CEO who will be able to galvanize our people and our partners around a clear vision for the next stage of our company.
“Obviously a new CEO will put their own stamp on the company, but the board is supportive of our long-term strategy,” he continued.
Hattersley added that “it is business as usual” until a successor is found, and he will “run through the tape to the end of the year.”
“As I prepare to step aside, I remain confident in the beer industry, in the company’s position, its business plans and its future,” he said.
No ‘Material Direct Impact’ From ‘Known Tariffs’
While Molson Coors has adjusted its guidance due to macroeconomic trends, the company does not believe it will see “material direct impact” from “known tariffs” enacted by President Donald Trump, CFO Tracey Joubert told investors.
Joubert highlighted that the majority of Molson Coors’ portfolio is produced in – and with products made in – the markets they are sold, and the company believes it is “one of the better positioned businesses” in beer.
“We continue to evaluate options to mitigate exposure and risk,” Joubert said. “For example, leveraging additional domestic supply where possible. And while tariffs have had indirect impacts, causing fluctuations in commodity costs like the Midwest Premium, our extensive hedging program can help to mitigate some of that exposure.”
Hattersley emphasized that the company will focus on “controlling what we can control.” That does not necessarily mean responding with price increases, as Hattersley also said the company expects to follow historical trends of +1% to +2%.