Cycling a soft first quarter of 2021, Molson Coors Beverage Company reported a +16.7% increase in net sales, to more than $2.2 billion, in Q1 2022, the company reported today.
Molson Coors attributed the increase in net sales in Q1 2022 to “positive net pricing, positive sales mix, including favorable brand mix from portfolio premiumization and favorable channel mix from fewer on-premise channel restrictions, as well as higher financial volumes.”
“Many of our core brands continued to outperform their peers, we again earned the largest growth in U.S. hard seltzers among major brewers and our expansion beyond beer continued to track ahead of our $1 billion revenue target,” Molson Coors president and CEO Gavin Hattersley said in a press release. “All were factors in delivering not just a successful quarter, but the most quarterly top-line growth this company has had in more than 10 years.”
Recall that in the first quarter of 2021, Molson Coors’ Q1 2021 net sales declined -9.7% as the company suffered from the effects of a cybersecurity attack that shut down many of its internal systems in March 2021; a winter storm that suspended operations at its Fort Worth, Texas, brewery in February 2021; and prolonged on-premise shutdowns in Europe.
A year removed from those challenges, Molson Coors’ worldwide business posted increases in financial volume (+5.1%), price and sales mix (+12.5%), net sales per hectoliter (+10.2%) and brand volume (+1.7%). Much of that growth was driven by business outside of the Americas, with Molson Coors’ business in Europe, Middle East, and Africa, plus Asia-Pacific growing financial volume (+29.4%), price and sales mix (+62.9%), net sales (+84.2%), net sales per hectoliter (+30.1%) and brand volume (+19.8%).
In the Americas, Molson Coors said its Q1 2022 net sales increased +8.5%, with net sales per hectoliter growing +9.8%. In the U.S., net sales per hectoliter increased even more (+11.2%), driven by “positive net pricing and favorable brand mix.”
Molson Coors reported a -0.8% decline in financial volumes due to lower brand volumes, only partially offset by cycling lower U.S. distributor inventory levels driven by the cybersecurity incident and Texas winter storm.
Molson Coors’ brand volume — a measure the company defines as including “an adjustment from sales-to-wholesaler (STW) volume to sales-to-retailer volume (STR)” — declined -3.1%, primarily driven by a -4.3% decline in the U.S. The company attributed its U.S. declines to the pruning of its economy portfolio last year, which was only partially offset by growth in its above premium portfolio “driven by hard seltzers,” primarily the national launch of Topo Chico Hard Seltzer.
Brand volumes in Canada declined -4.5%, while Latin America brand volumes increased +13.8%. Price and sales mix in the Americas increased +9.4% through March 31.
Molson Coors noted that its cost of goods sold per hectoliter increased +4.9%, due to inflation on input materials and transportation costs.
Marketing, general and administrative costs increased +24.5%, which factored in a $56 million jury verdict against the company in Stone Brewing’s trademark infringement lawsuits regarding the Keystone Light brand.
“As of March 31, 2022, we accrued a liability of $56.0 million within other liabilities on our unaudited condensed consolidated balance sheet as the best estimate of probable loss in the Keystone litigation case based on the jury verdict,” the company said. “However, the estimate of the loss could change based on the progression of the case, including the resolution of remaining defenses and other post-trial issues as well as any appeals process.”
Molson Coors also reported a non-cash impairment charge of $27.6 million taken on its Truss LP joint venture with Canadian cannabis firm Hexo that explored CBD beverages.
Molson Coors reaffirmed its top- and bottom-line guidance for full-year 2022, although the company noted that “inherent uncertainties that exist in the macroeconomic environment, including significant cost inflation, the extent and duration of the ongoing Québec collective bargaining negotiations and related strike and the ongoing coronavirus pandemic could impact our financial performance.” Nevertheless, the company expects net sales to increase mid single-digits.