Molson Coors posts best quarterly top-line growth in more than a decade in second quarter

Molson Coors Beverage Company today said it posted its best quarterly top-line growth in more than a decade, fueled by the return of on-premise sales around the globe and a continued shift to higher-priced, above-premium beverages.

The company said second-quarter net sales revenue rose 17.4% to $2.94 billion, compared with the year-ago quarter. Net income jumped 99.3% to $388.6 million, or $1.79 per diluted share, up from $195 million, or 90 cents per share, in the second quarter of 2020. The company beat Wall Street expectations for the top and the bottom line.

“We’ve had our share of challenges over the last several years. But that is changing, and today the signs all say the same thing: Molson Coors’ future is bright, and the revitalization plan is succeeding,” said Molson Coors CEO Gavin Hattersley.

The corporate restructuring and revitalization plan Hattersley and team implemented in late 2019 is beginning to bear fruit, he said. “We’ve reached the point where the investments, partnerships and product launches … are now bearing results, and we plan to put our foot even more firmly on the gas pedal as we drive towards sustainable top- and bottom-line growth for this business.”

During the second quarter, the company also paid down debt and reinstated a quarterly dividend, starting this quarter at 34 cents per share.

Premiumization pays off

In the quarter, above-premium brand volume reached the highest percentage of the company’s U.S. portfolio since the creation of the MillerCoors joint venture in 2008, and a record-high portion of its European portfolio, as well.

As a result, net sales per hectoliter, a key measure of profitability, rose 5%, in part due to a “historic improvement” of brand mix in the U.S. and Europe, the company said.

Reshaping Molson Coors’ portfolio toward more premium products, such as hard seltzers, higher-end beers and energy drinks was a key goal of the company’s revitalization plan. As part of that shift, Hattersley said today the company would discontinue some 100 of its slower-moving items and stock-keeping units, or SKUs, primarily within its economy portfolio. That includes cutting brands such as Magnum and Mickey’s Ice.

Many of those brands had been paused in recent months, allowing Molson Coors to improve brewing efficiency and stabilize its stable of core brands, resulting in improved margins, Hattersley said in a call with Wall Street analysts.

“This will improve our supply chain flexibility for our more profitable priority brands, enhance our innovation efforts, enable us to better focus resources and ensure dependable and on-time shipments to our distributors,” he said.

It will also allow the company to invest bigger behind its fast-growing global hard seltzer portfolio, which is helping drive premiumization in the U.S. and beyond.  

Last quarter Molson Coors doubled its share of the segment in the U.S., taking over the No. 4 spot in total seltzer share among all brewers. Despite discontinuing its Coors Seltzer brand in the U.S., the company maintains its goal of achieving a 10 share by the end of 2021 based on strength of Vizzy and Topo Chico.

“The headline is simple: Premiumization is here to stay at Molson Coors," Hattersley said.

Beer booms back

Consumers’ return to the on-premise has propelled Molson Coors’ beer brands, which remain the core of the business.

The two largest beers in Molson Coors U.S. portfolio, Miller Lite and Coors Light, each posted brand volume growth in the second quarter versus the same quarter a year ago, combining to round up share of the premium lights segment for the 27th consecutive quarter.

Brands like Blue Moon LightSky and Leinenkugel’s Summer Shandy have posted double-digit sales volume gains so far in 2021.

In Canada, Coors Light has grown its share within its largest retail customer over the first half of 2021, the first time the brand has generated a similar result in more than a decade, Hattersley said.

Meanwhile, breweries within the company’s Canadian craft division, Six Pints, are growing volume despite restrictions in the on-premise.

In the U.K., Madrí Excepcional is exceeding company expectations, with “unprecedented consumer demand,” Hattersley said.

Another European brand, Praha, also is selling ahead of expectations, beating estimates by more than 50 percent.

And in Latin America, Molson Coors brands are outselling 2019 volume levels despite continued government-issued pandemic restrictions.

Beyond-beer bets booming

Beyond the beer aisle, another area of focus for Molson Coors, investments in several brands are starting to pay off.

By the end of July, the energy drink ZOA already has surpassed the company’s expectations for the full year, climbing into the top 20 energy drink brands despite just 7% market penetration. In just four months, it’s outselling established brands in retailers across the U.S., and will soon land in Walmart, Kroger and more

La Colombe’s ready-to-drink coffee, meanwhile, is ranked No. 1 in the above premium category, ringing up success in large, national and regional retailers like CVS, Speedway and Quick Trip.

And Truss Canada, Molson Coors’ joint venture with HEXO Corp., has corralled more than a 50 share of the Canadian cannabis beverage industry, holding seven of the top 10 SKUs in the country.

“We can say … with confidence, that Molson Coors is on the path to deliver sustainable top- and bottom-line growth,” Hattersley said. “Our performance this quarter speaks for itself.”