Molson Coors Sales Decline 2.1 Percent in 2018

Citing negative volume trends in the U.S. and Canada, Molson Coors reported a 2.1 percent decline in net sales in 2018, according to yesterday’s full-year earnings report.

In 2018, Molson Coors posted nearly $10.8 billion in net sales, down from more than $11 billion in 2017. Global brand volumes of Molson Coors products declined 1.9 percent, to 92.1 million hectoliters, while net sales per hectoliter increased 0.9 percent.

Molson Coors’ full-year domestic sales-to-wholesalers (STWs) declined 4.4 percent compared to 2017 levels. Sales-to-retailers (STRs) were down 3.9 percent, which the company attributed to lower volumes in the premium light and economy segments.

However, Molson Coors’ fourth-quarter trends were even worse. Global net sales in Q4 declined 6.2 percent, to $2.4 billion, despite slight growth in sales per hectoliter (+0.3 percent). The company’s worldwide brand volumes also declined 1.5 percent, to 22 million hectoliters, in the quarter.

In the U.S., net sales declined 7 percent, to $1.6 billion, for the three-month period ending December 31. Fourth-quarter domestic STWs declined 8.9 percent, while STRs dipped 5.1 percent.

Molson Coors CEO Mark Hunter told analysts and investors on Tuesday that the company is “dissatisfied with the 2018 topline and share performance.” Nevertheless, he said the company has assembled a team and devised a strategy to improve performance in 2019.

In fact, Molson Coors leaders pointed to Nielsen data showing improved off-premise sales trends for the first six weeks of 2019. MillerCoors CEO Gavin Hattersley noted that Coors Light is “down low-single digits,” while Miller Lite “is now firmly in positive territory, year-to-date, keeping pace with the industry.”

Part of the strategy for 2019 is investing in and building the company’s above premium portfolio of brands.

“We are underrepresented in above premium,” Hunter said. “While we continue to protect, defend and stabilize our large brands — Coors Light and Miller Lite — we must accelerate the pace of premiumization in our portfolio.”

As such, Hunter said the company is doubling its advertising spend on Blue Moon in hopes of returning the brand to growth, and launching the first national ad campaign for import label Peroni. The company is also launching several new innovations, including Cape Line canned cocktails, Saint Archer Gold light lager, Sol Chelada and line extensions of its Crispin Cider brand. He added the company will continue to invest behind Arnold Palmer Spiked Half and Half tea, the Sol flagship offering and Henry’s Hard Sparkling Water products.

Still, Hunter said Molson Coors’ goal is to align its overall volume performance with the beer industry, hold onto its market share and ensure that Coors Light and Miller Lite “are outperforming the segment.”

“Miller Lite’s there,” he said. “Coors Light is moving back in that direction.”

Executives were also asked about the impact of Anheuser-Busch InBev’s Super Bowl ads — which pointed out that Coors Light and Miller Lite use corn syrup in the brewing process. Hattersley referred to the ads as a “gift” that fired up the company’s employees and wholesalers.

“It’s disappointing that ABI has chosen to single-handedly damage the overall health of the beer category health initiative by disparaging American farmers and the natural ingredients that most brewers, including themselves, I might add, use quite extensively,” he said.

Hattersley credited recently hired CMO and former Kraft Heinz executive Michelle St. Jacques for helping lead the company’s response, which included an ad in The New York Times.

“What she’s going to bring to us is new ideas and speed,” he said. “You can see the way we’ve reacted.”

As for Truss, Molson Coors’ joint venture with Canadian cannabis company Hexo, Molson Coors Canada president and CEO Frederic Landtmeters said the company is preparing its portfolio of offerings for the expected legalization of cannabis-infused beverages in October.

“I think I can say we’re on track to be ready on Day One,” he said.

Hunter added that he expects to share more about the portfolio by mid-2019. As for potentially entering the U.S. market, he said it’s too early to comment on opportunities until cannabis is federally legal. However, he said the company is monitoring the cannabidiol (CBD) space.

Molson Coors stock (TAP) stock declined 9.4 percent yesterday, to about $59.19 a share.

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