As it lapped the gains made in the wake of the Bud Light boycott last year, Molson Coors recorded declines in volume and net sales during the second quarter of 2024.
However, company leadership was unshaken.
“We are pleased with our results this quarter, which played out largely as we had expected,” CEO Gavin Hattersley said during a conference call with investors and analysts. “We acknowledge that there are a few near-term timing dynamics impacting our quarter-to-quarter performance this year.”
In the U.S., Molson Coors posted depletions (sales to retailers) declines of -7.8%, outpacing the rest of the Americas division (-7.3%). Shipments (sales to wholesalers) declined -5.6%, in part due to the winding down of Molson Coors’ longstanding contract brewing relationship with Pabst, which is set to expire at the end of this year.
Another drag on volume from Q1 to Q2 was a “deliberate” increase in shipments during the 14-week strike at Molson Coors’ Fort Worth brewery, which resulted in shipments outpacing depletions by 750,000 hectoliters in Q1 and 350,000 hectoliters in Q2, Hattersley said.
“We made a deliberate decision to increase our U.S. inventories in anticipation of and during the strike at our Fort Worth brewery, which ran 14 weeks during February through May,” he said. “We did this to ensure we had healthy inventories during the peak summer season.”
In the Americas, net sales declined -1.7%, outpacing the company’s global net sales decline of -0.4%. The decline was partially offset by a +4.1% increase in price and sales mix, “primarily due to increased net pricing and favorable sales mix as a result of lower contract brewing volumes in the U.S.,” according to the company’s earnings report.
The share gains made last year by Molson Coors’ flagships brands (Miller Lite, Coors Light, Coors Banquet) appear to be somewhat sticky. Although the trio’s share collectively declined by half a point in Q2 year-over-year (YoY), they still have two more share percentage points than they did in Q2 2022, Hattersley said.
“This means that we retained approximately 80% of our peak share gains on our core power brands,” he added.
Core brands gained +13% shelf space in large format stores during spring retail resets, Hattersley said. However, Molson Coors’ craft and hard seltzer offerings – which includes brands such as Blue Moon, Leinenkugel’s and Vizzy and Topo Chico hard seltzers – “felt the biggest pinch in space,” he added.
Unlike last year when “an unprecedented, unusually high percentage of retailers” executed fall resets in addition to spring, the company is not expecting “meaningful” changes in retail space this fall, Hatterlsey said.
“We’ve cycled our toughest comp, we’ve retained 80% of the share gains, and it only gets easier from here on out,” he said. “And so again, our expectation from a shelf space point of view is retailers will go back to that tweaking and minor adjustment process, which they’ve done over the years.”
Circana data depicts a rollercoaster ride for both the Miller and Coors brand families. In the 52 weeks ending July 14, the Coors brand family has increased dollar sales (+12%), volume (+9.9%) and dollar share (+0.70%) at off-premise retailers tracked by the market research firm.
Those gains appeared more muted in the year-to-date (YTD) data: +4.1% in dollar sales, +2.8% in volume and +0.30% in dollar share. However, they evaporated in the 12-week period ending July 14 (L12W), when the Coors brand family recorded declines in dollar sales (-5.1%), volume (-6.3%) and dollar share (-0.31%).
Coors’ losses decelerated in the L4W through July 14, with slight improvement in dollar sales (-4.3%), volume (-5.3%) and dollar share (-0.25%).
Miller Lite has recorded similar ups and downs – the brand’s dollar sales increased +7% in the L52W ending July 14. Volume increased +4.9% and dollar share increased +0.32% in that period. YTD through mid-July, Miller’s dollar sales gains shrank to +0.9%, while the brand’s volume declined -0.6%. Its dollar share grew +0.07%.
Similar to its sibling brand, Miller Lite’s metrics are in the red in the L12W and L4W, but showing signs of improvement period-over-period:
- L12W – dollar sales, -5.7%; volume, -7.2%; dollar share, -0.27%;
- L4W – dollar sales -4.6%; volume -6%; dollar share -0.2%.
Circana data does not include the on-premise, which Hattersley pointed out has performed “slightly better than the off-premise in the quarter.”
“Given how important it is to building brands, it’s an area we focus on meaningfully,” he continued. “Whether it’s our core brands of Miller Lite and Coors Light or whether it’s Blue Moon. Kegs is an important part of that strategy.”
In its 2019 revitalization plan, Molson Coors declared the above premium space a core pillar of its strategy, even cutting some below premium brands to shift more volume into the more valuable part of its portfolio, which includes craft, imports and flavored offerings.
Blue Moon Belgian White, Molson Coors’ lead craft offering and the top-selling craft beer in off-premise retailers, continued to lag behind the craft segment in Circana-tracked off-premise channels. Dollar sales of the brand have declined -4.9% YTD through July 14, while overall craft’s dollar sales declined -3.3% in the same period.
The company unveiled a 360-degree plan to revive the Blue Moon family last fall, which includes refreshed packaging, advertising, a new non-alcoholic offering and a makeover of Blue Moon Light (nee Blue Moon Light Sky Citrus Wheat).
“Blue Moon is our biggest above premium brand,” Hattersley said. “It’s a big important brand for us and for our distributors and our retailers, and we’re committed to turning that brand around.”
Elsewhere in the company’s above premium portfolio, Hattersley called out Peroni’s transition to stateside production.
“The biggest challenge that we’ve had with Peroni has been consistent supply and by bringing it onshore and putting it into our supply chain network, which is operating really well and effectively at the moment, it’s going to allow us to give really consistent supply of fresh Peroni to our distributors and obviously, our retailers,” Hattersley said. “We think that’s really important.”
YTD through July 14, Molson Coors’ overall dollar sales were flat (+0.1%) and volume declined -1% in multi-outlet grocery, mass retail and convenience stores tracked by Circana. The company is now the No. 3 beer category vendor, after being leapfrogged by Constellation Brands, importer of Modelo, Corona and Pacifico.