CANADA – In a bid to reverse the collapsing Canadian beer market that has had a declining consumption since 1973, Molson Coors has taken ‘Brewing’ out of its name and turned to seltzers, whiskey, and cannabis drinks.
Fred Landtmeters, President/CEO at Molson Coors Canada said: “Something one of our colleagues in the industry said to me was, ‘This industry is doomed to decline forever.’ I mean, no. There is growth, but the growth isn’t coming from the beer.”
Since per capita beer consumption peaked at 128.5 liters per drinking-age Canadian in 1973, it has been virtually all downhill, mirroring trends around the world and in 2020, the latest year for which Statistics Canada data is available, that number stood at 69.6 liters.
As beer has fallen, wine and the demand for “ready-to-drink” beverages, from hard lemonade to alcoholic kombucha and hard seltzers, have been soaring.
In a recent report, Morningstar equities, analyst David Swartz said the company’s former mainstays are holding Molson Coors back, suggesting that it’s the biggest beer brands have been suffering the most.
“These trademarks that once were a strength are now mostly albatrosses, in our opinion, largely declining in relevance and volume,” Swartz wrote.
In its most recent quarter, Molson Coors saw profits plunge to $47.3 million (U.S.), from $388.6 million a year earlier.
The shift of offerings to profits
The shift beyond beer has also been met with a name change; in early 2020, Molson Coors Brewing Company was reborn as Molson Coors Beverage Company.
Molson Coors, in trying to adapt to this new reality, made investments of US$100 million into the world of hard seltzers.
The investment included a US$60-million investment in a new production and packaging line for seltzers at the company’s Toronto facility, which can produce up to five million hectoliters (500 million liters) of beer per year.
The brewery giant has also spent US$600 million on a brand-new brewery in Longueuil, Que. The Longueuil brewery, which opened late last year, replaced the company’s Montreal plant.
In addition, the company has a joint venture with cannabis firm Hexo, as it looks to collaborate on THC and CBD beverages.
The move out of beer led to the launch of Trail whiskey, a blend of bourbon and single malt that uses barley from the Coors malthouse in Golden, Colo, in the US last fall.
If there’s one thing Landtmeters isn’t particularly worried about, it’s the growth of the legalized cannabis market.
While some doom and gloom forecasts were predicting legalized pot was going to eat into beer’s market share, those haven’t come true, he said.
Although marketing consultant and author Alan Middleton highlights that the trickiest thing for any big company is figuring out which new products will work, and which ones won’t especially when its main products are in decline, creating new ones is even more vital.
At the moment, Landtmeters is confident Molson Coors is heading in the right direction both internally and externally.
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