Molson Coors Notes: Coke FMB Deals, Zoa Ownership Stake, Bud Light Trend Cycle, Expiring Pabst Contract

Several news nuggets came out of Molson Coors’ annual 10K filing with the Securities and Exchange Commission (SEC) and first ever presentation at the Consumer Analyst Group of New York (CAGNY) conference earlier this week.

Among them was that the company is using existing employees to operate the company’s production facility in Fort Worth, Texas, where union workers are now on strike. Brewbound Insiders can read more about the strike and the significance of the Fort Worth brewery.

Several other notes emerged from the filing and the presentation. Among them …

Molson Coors’s agreements with Coca-Cola for brands such as Topo Chico Hard Seltzer, Simply Spiked and Peace Hard Tea “have varying expiration dates and performance criteria, with several agreements approaching expiration in the near future,” according to a list of risks in the 10K filing. The company said a “non-renewal or loss of one or more of” those agreements could adversely affect the business. The same language appeared in the previous year’s filing.

Molson Coors increased its ownership stake in Dwayne “The Rock” Johnson’s ZOA Energy drink brand in Q3 2023, bringing its stake to 40%. The company holds an option to increase its share to more than 50% starting in September 2024.

Molson Coors accounts for around 23% of the North American beer market, and is the second largest brewer on the continent. North America makes up the largest piece of Molson Coors’ Americas region.

No customer accounted for more than 10% of Molson Coors’ net sales in the last three calendar years. Coors Distributing Company accounted for around 5% of the company’s total owned and non-owned Americas segment net sales for the year ending December 31, 2023.

At CAGNY, CEO Gavin Hattersley tackled the potential trend shift for the Bud Light brand as it edges closer to cycling the beginning of the conservative-led boycott that started in mid-April 2023.

“If a particular brand was declining pretty steadily at say 30% every week for a year, and then … the first week of April, it starts declining -2%, that’s not good,” Hattersley said. “That’s not an improvement. That’s actually getting worse, because it means it’s down -32%. And I know that some folks are going to spin that as an improvement, but it’s actually not. You’re all smart people. You know, right? Down -30% and down -2% is not getting better, it’s getting worse.”

The reaction to the company’s Coors Light Super Bowl ad was “incredibly positive,” with a +300% increase in social conversations about the brand during the game, Hattersley said. He claimed that Coors Light had “by far the most positive sentiment of any beer brand during the game.”

Hattersley claimed that Molson Coors is the “biggest beneficiary” of the spring shelf resets in the U.S. In the company’s largest chain grocery retailers, Molson Coors expects to increase shelf space for its core brand – Coors Light, Miller Lite and Coors Banquet – by more than 10% on average. In convenience stores, the company is seeing its “largest retailers mirroring the space increases” in the grocery channel.

CFO Tracey Joubert referred to the expiring Pabst Brewing contract at the end of the year as a “low margin but large” volume arrangement that will amount to around a 3%, or about 2 million hectoliters (about 1.677 million barrels), headwind to the company’s Americas financial volume. She called the expiration of the contract “a positive overall,” adding capacity during the summer months and reducing complexity at its breweries.

Hattersley highlighted Madri Excepcional, which launched in the U.K. in 2021 and is “the fastest growing major beer brand” there by volume and value. The brand is expanding to Canada and European markets this year. It’s now a top 10 brand in the company’s global portfolio.