Molson Coors Reports Second Quarter Earnings

Gavin Hattersley (left) and Mark Hunter

Molson Coors today reported its second quarter earnings results, which were highlighted by a 2.3 percent increase in global brand volumes, to 26.4 million hectoliters.

Global volume sales for Coors Light, Coors Banquet, Miller Lite, Miller Genuine Draft, Staropramen and Blue Moon Belgian White increased 4.6 percent during Q2, the company said, and the entire Miller family of brands experienced “strong growth” in Europe and international markets.

It was a different picture in the U.S., however, as MillerCoors’ shipments to wholesalers (STWs) declined 0.4 percent, and sales to retailers (STRs) declined 1.9 percent during the quarter. Declining premium light and below premium volumes contributed to the losses, but those were partially offset by the growth of above premium brands, the company said.

Molson Coors has a stated goal of reversing downward MillerCoors trends and returning the unit to growth in 2019. During a call with investors, Molson Coors CEO Mark Hunter said those plans “remain unchanged.”

Since 2008, MillerCoors has suffered domestic volume losses of about 11 million barrels. However, during that same period of time, the company said its “above premium percent of portfolio mix increased 60 percent.”

Indeed, Molson Coors CFO Tracey Joubert said the company’s U.S. portfolio of regional and national craft beer brands helped drive “low-single digit” growth within its above premium portfolio in Q2.

“Blue Moon Belgian White, Leinenkugel’s and Peroni grew strongly while Redd’s and Henry’s posted lower volume,” Joubert said.

Hunter, meanwhile, called sales of Blue Moon Belgian White “resurgent,” and said the company “continues to integrate and expand each of our recent craft acquisitions, which are growing strongly.” Those acquisitions include San Diego’s Saint Archer Brewing, Oregon’s Hop Valley Brewing, Texas’ Revolver Brewing and Georgia’s Terrapin Brewing.

Hunter also hinted at the possibility of purchasing other craft offerings, saying that there were “one or two geographical gaps” to fill in the company’s above premium portfolio while adding that the strategy would be to “build, buy or borrow.”

Recently, the company has borrowed, inking a 10-year deal with Heineken to the distribute and market the Mexican import label Sol. It has also established a partnership Hornell Brewing, a division of Arizona Beverages, to market and sell a spiked version of the popular Arnold Palmer Half and Half drink.

“I’d rather share the margin and add to our margin as opposed to not compete in some parts of the industry,” Hunter said. “I think that’s working effectively for us.”

For his part, MillerCoors CEO Gavin Hattersley said the U.S. business’ year-to-date sales to retailers (STRs) were down 2 percent, while sales to wholesalers (STWs) were down 2.1 percent.

“So they are converging,” he said. “And we do estimate that our Q3 distributor inventory levels will be in line with the prior year’s.”

Molson Coors net sales declined 0.6 percent during the quarter, to nearly $3.1 billion, while net sales revenue per hectoliter declined 0.2 percent, to $109.08.

U.S. net sales per hectoliter, excluding contract brewing and company-owned-distributor sales, also increased 1 percent in Q2, which the company attributed to higher net pricing and sales mix.

Wall Street responded favorably to the results as shares of Molson Coors (TAP) rose 2.64 percent, to $91.83.