Molson Coors Sales Up 4% in 3rd Quarter, but Net Plunges
Molson Coors Beverage Co. reported its sixth consecutive quarter of top-line growth, saying third-quarter net sales revenue rose 4% to $2.94 billion. Net income was $216.4 million, or 99 cents per diluted share, less than half the $453 million, or $2.08 per diluted share, recorded in the third quarter of 2021.
The company said higher prices and the continued premiumization of its portfolio helped offset persistent global inflationary pressures and reaffirmed its key financial guidance for the full year, which would mark the first time in more than a decade Molson Coors would grow both its top and bottom line in a full fiscal year.
“Nearly three years into our revitalization plan to turn around this business, Molson Coors’ top- and bottom-line growth is not just the story of a quarter, it’s becoming a trend,” Molson Coors CEO Gavin Hattersley said in a call with analysts and investors. “We have made substantial progress across this business in under three years. We have done it in spite of serious challenges no one saw coming. And we remain focused on setting up Molson Coors for long-term, sustainable top- and bottom-line growth.”
Molson Coors’ third quarter was lifted by strong performance of its core brands such as Coors Light, Miller Lite and Coors Banquet, which combined to grow a full share point of the premium beer category in the U.S. In Canada, Molson Canadian grew net sales revenue and share of its segment, while Miller Lite grew volume by double digits. And in the U.K., Carling widened its lead as the country’s No. 1-selling beer.
The company’s performance also benefited from deliberate and sustained premiumization – a strategic move to develop and market higher-priced beverages.
Simply Spiked Lemonade was the fastest-growing new flavored alcohol beverage in the U.S. in the quarter, while Topo Chico Hard Seltzer held its spot as the fastest-growing hard seltzer in the U.S.
In the U.K., Madri Excepcional continued its surge, gaining more market share than any of Molson Coors’ global brand innovations since the Molson-Coors merger in 2005. It is now Molson Coors’ No. 3 brand in the British market.
Molson Coors’ top-line growth came despite continued global inflation, which resulted in escalating prices for transportation and key raw materials, pushing the cost of goods sold up double digits for the quarter.
On top of that, consumer demand has weakened in Central and Eastern Europe, where consumers tend to have less disposable income and are therefore more prone to inflationary pressure, Hattersley said. That “has put a strain on this portion of our business.”
Nonetheless, consumers in the U.S., Canada and the U.K. have proven relatively resilient, with no signs of significant shifting into lower-priced beverages, he said.
In the U.S. and Canada, “the industry is continuing to trade up,” Hattersley said. Topo Chico Hard Seltzer and Simply Spiked Lemonade, for instance, both finished the quarter firmly among the industry’s top 10 growth brands. Blue Moon grew share of the U.S. craft segment, and Peroni volumes were up double digits for the quarter in the U.S.
In Canada, Miller Lite, which is sold as an above-premium beer, turned in double-digit growth and overall industry share growth in the quarter.
Even in the U.K. where the economic environment is more volatile and uncertain, there “are no signs of significant channel shifting,” he said. Take Madri Excepcional, which continued its torrid run, helping Molson Coors gain share of the overall beer market in the country.
That bodes well for Molson Coors’ migration into higher-priced beverages. But Hattersley underscored that even if consumer behavior in these markets begins to change, “we have the right portfolio to compete in a more challenging economic environment” and evolved into a business “that is able to adjust to conditions more nimbly.”
Overall, Hattersley said, Molson Coors posted “strong industry share performance across every one of our major markets globally” and remains “well positioned for the road ahead.”