Molson Coors’s revenue falls short by 0.67% as inflation limit consumers spending on beer

US – Multinational beverage company, Molson Coors has reported a 0.67% decline in second-quarter net sales as consumers limit their spending on beer due to inflation.

Analysts say some beer drinkers are trading down, while others are still shelling out for pricier six-packs, leaving an uncertain macroeconomic environment weighed on the stock market.

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This is after Molson Coors’ six-packs have gotten more expensive, making consumers shift to trade down to its lower-priced options.

The company has also raised its prices in the spring by nearly double its usual rate and is considering another round of hikes toward the end of 2022.

The owner of brands such as Miller Lite and Carling beer also reported an 87.8% decrease in net income to US$47.3 million.

Brand volumes decreased 1.8%, primarily due to a 2.2% decline in the Americas segment as a result of “softer” industry performance and the impact of the Québec labor strike.

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The company also saw a 0.7% decline in EMEA&APAC due to the impact of the Russia-Ukraine conflict.

On the other hand, the drinks giant posted a 2.2% net sales increase in constant currency, with positive net pricing and a favorable brand and channel mix more than offsetting lower financial volumes.

Molson Coors said it outpaced the broader industry in the U.S., Canada, and the U.K. during the period. 

CEO Gavin Hattersley credited strong sales growth for pricier drinks like Blue Moon and Peroni beer, as well as strengthening demand for cheaper beers like Miller High Life and Keystone Light.

However, a year ago, Molson Coors began trimming its portfolio of lower-priced beers to focus more on other options.

Some investors wanted the company to ditch the segment altogether and instead focus entirely on more expensive beers, which have performed better in recent years.

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Sarcastically, Hattersley commented that What some would regard as an Achilles heel, in the past, has positioned the company perfectly at the moment.

He added that some of the beer maker’s competitors only operate in the premium space, which is obviously not a place the company would like to be as it is heading into what’s clearly going to be tough times.

Hattersley stated: “After growing the top line for the first time in a decade last year, we have now generated net sales growth for five straight quarters for the first time in over a decade on a constant currency basis.

We believe we have the portfolio to compete and win across all segments and a strong backstop in challenging economic times.

This is our revitalization plan at work, and I am incredibly proud of our teams around the world who are working to deliver these results.”

Molson Coors expects to achieve full-year targets for net sales and other financial metrics, although it cites continued cost inflation and the ongoing coronavirus pandemic as factors that could affect its financial performance.

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