The beer category’s sluggish summer was apparent in Molson Coors’ third quarter earnings, which the company reported last week.
Net sales in the Americas declined -11%, driven by a -15.6% decline in financial volumes “and unfavorable foreign currency impacts, partially offset by favorable price and sales mix,” Molson Coors wrote in its earnings report.
Financial volumes (similar to shipments) declines were steeper in the U.S. at -17.9%, which CEO Gavin Hattersley attributed to “anticipated unfavorable shipment timing and the wind down of a contract brewing agreement,” referring to the end of the company’s partnership with Pabst.
However, the company’s outlook remains positive, as the decline “largely played out as we expected,” Hattersley said during a conference call with investors and analysts.
“Given the key drivers in the third quarter, we don’t see these results as representative of the long-term growth potential for our business,” he said.
Nevertheless, Molson Coors is adjusting its net sales revenue guidance for 2024 from “up low single-digits previously,” to down -1%.
A favorable price and sales mix, driven by a reduction in contract brewing, contributed +4.9%, according to the release.
Brand volumes (similar to depletions) in the Americas division declined -5.4% overall, but with mixed results in the region’s two largest countries. In Canada, brand volumes increased +3.9%, fueled by above premium products. In the U.S., brand volumes declined -6.2% “primarily due to cycling double digit-growth in our core power brands,” the company noted. That double-digit growth boosted sales of Coors Light, Miller Lite and Coors Banquet in the wake of the conservative boycott of Bud Light.
Despite volume declines, Molson Coors’ core brands have maintained and increased the share they gained last year, Hattersley said.
“We gained and have gained and retained about 190 basis points of share growth over the first nine months of the year when you compare it with 2022, so that’s very pleasing,” he said. “In the latest four-week read, we’re retaining about 80% of the share that we gained last year, so I’m very, very pleased with that outcome. We’ve retained most of it and that seems to be settling down at this level.”
The decision to lower net sales revenue guidance was influenced “by what we experienced in July and August,” Hattersley said during the question-and-answer part of the call.
“Those were tough months for the industry and, of course, we were impacted the same,” he said. “We certainly did see some improvement in September. And over the last sort of four or five weeks, as we’ve got into Q4, the overall industry has performed a lot better than it did in July and August. Of course, July and August are important months for us, right? Because it’s the middle of summer.”
In the 13-week period ending October 5 (L13W), which includes most of July and all of August, Molson Coors’ dollar sales declined -7.1% and volume, measured in case sales, declined -8.7% at off-premise retailers tracked by NIQ, according to data provided by 3 Tier Beverages.
In that period, dollar sales (-4.8%) and case sales (-6.5%) of the Coors brand family declined by rates nearly identical to those of the Miller brand family (-4.9% in dollars, -6.6% in cases).
Above Premium and Beyond Beer Brands
Since the revitalization project Molson Coors launched in late 2019, the company has placed special emphasis on above premium products, which its beyond beer portfolio falls under.
Simply Spiked, the hard lemonade brand Molson Coors launched in 2022 as part of a licensing agreement with Coca-Cola’s Simply juice brand, has recorded double-digit declines. Dollar sales of the brand declined -20.7% in the L13W, and case sales declined -21.7%. Those losses have decelerated in the L4W (-14.1% in dollars, -15.5% in cases), and the company launched a cranberry-based variety for the fall.
“We have seen some softening on some of the original packs that we launched,” Hattersley said. “But Simply, as we’ve said before, the non-alc brand is about found in one out of every two households in America. We continue to believe that there’s potential to drive growth into distribution and household penetration going forward.”
Happy Thursday, the hard refresher brand Molson Coors launched in March, is garnering “lots of positive feedback from many different markets,” Hattersley said.
“We think that brand really hits the intersection of what legal-age Gen Z consumers are after,” he continued. “It’s a great bubble-free beverage. It’s flavorful. It stands out on shelf.
“It’s too early for us to predict how big this brand could actually become, but we’re certainly encouraged by the early results,” Hattersley said. “We are certainly very happy that we’ve got first-mover advantage here. And we’re going to continue to support this brand.”
Molson Coors significantly upped its marketing spend in Q4 2023, and while it will not be doing the same in 2024, the company expects its “marketing investment to be up versus 2022.” Those dollars will be concentrated on above premium brands such as Blue Moon, Madri and Peroni.
To bolster Blue Moon, the best-selling craft brand in the country, Molson Coors redesigned packaging, rechristened the brand’s lighter offering as Blue Moon Light and introduced a non-alcoholic version – all plans that were unveiled during the company’s wholesaler summit in 2023.
“In total industry dollar share, we’re seeing sequential improvement for the Blue Moon family and the last 52 [weeks] and flat in the last 13 weeks,” Hattersley said. “We continue to see positive momentum behind some of our new innovations, whether that’s the repositioning of Blue Moon Light and whether it’s the launch of Blue Moon Non-Alc, which is now the No. 2 craft non-alc brand.
“We’ve got a lot of activity behind Blue Moon,” he continued. “We’re starting to see the impact from a share of total industry point of view and we’re going to continue to drive that.”
In the L13W through October 5, dollar sales of the Blue Moon family declined -0.2% and case sales declined -3% in NIQ data, which does not include on-premise retailers. The brand gained +0.3 dollar share points in the period.
Blue Moon’s trends have reversed in the L4W, with dollar sales up +1.1% and dollar share up +0.5 points, according to NIQ data provided by 3 Tier Beverages.
Year-to-date through October 6, Molson Coors is the No. 3 beer category vendor in multi-outlet grocery, mass retail and convenience stores tracked by market research firm Circana. Both dollar sales (-1.7%) and case sales (-3.3%) have declined, as has share of beer category dollar sales (-0.17 share points, to 18.05%).
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