Molson Coors Beverage Co. said today it grew the top-line for the fifth consecutive quarter on a constant currency basis and reaffirmed its full-year 2022 guidance for both top- and bottom-line growth.
Despite a soft overall beverage industry, global inflationary pressures and a strike at its Montreal-area brewery, the company said it is outpacing the industry in its three largest markets: the U.S., Canada and the U.K.
Molson Coors CEO Gavin Hattersley said in a call with analysts that the company in its second quarter grew dollar share in the U.S., grew volume and dollar share in Canada (with the exception of Quebec), and ranked as the largest share-gainer in the U.K.
The company’s performance, Hattersley said, is not a coincidence, rather “the rewards of our continued to commitment to and execution of” its revitalization plan.
On a constant current currency basis, the company said second-quarter sales revenue grew 2.2%.
Including an $82.5 million unfavorable impact from foreign exchange, net sales revenue for the quarter fell 0.6% to $2.92 billion compared with the year-ago quarter. Underlying income before income taxes was $328.1 million, down 24.3% from the year-ago quarter and down 22.8% on a constant currency basis. The company attributed the expected decline to lower financial volumes, cost inflation, and higher marketing and general administrative costs.
The results were “at the favorable end of our anticipated range,” said Chief Financial Officer Tracey Joubert. Despite global inflationary pressures, the Montreal-area strike and cycling a strong shipment quarter in 2021, “Our performance and our organizational agility demonstrate our success … (and) provide us the confidence to reaffirm our (financial) guidance, which calls for both top- and bottom-line growth” for 2022, which would mark the first time in more than a decade the company would grow revenues and profits in a full fiscal year.
Core brands outpacing industry
Around the world, the company’s core brands “are not just stronger than they have been in many years… (they’re) outpacing the rest of the industry,” Hattersley said.
In the U.S., Coors Light and Miller Lite combined in the second quarter to turn in their best quarterly industry share performance in nearly seven years. Coors Banquet, meanwhile, posted double-digit sales growth and grew share of the overall industry.
In Canada, Molson Canadian is growing share of the total beer industry for the first time in eight years.
Carling, the largest beer brand in the U.K., further solidified its position as the top-selling beer in the market, while the company’s so-called “national champion brands” in Central and Eastern Europe are growing share in the majority of markets.
Above-premium brands hit record-high
Molson Coors’ portfolio of above-premium brands again hit a record-high percentage of its global portfolio as measured by net sales revenue over a trailing 12-month basis, passing in the second quarter the net sales revenue of its U.S. economy portfolio.
The company attributed the surge to the rapid growth of its hard seltzers, a fast start for Simply Spiked Lemonade in the U.S. and the strength of Blue Moon and Peroni in the U.S.
In the U.S., Vizzy and Topo Chico Hard Seltzer combined to give Molson Coors the fastest-growing hard seltzer portfolio in the U.S. and growing share of the total beer industry. Simply Spiked Lemonade, meanwhile, blazed out of the gates, garnering a 3.5 share of the flavored malt beverage segment, according to IRI’s latest four-week data.
Six Pints Collective, the company’s Canadian craft beer arm, posted another strong quarter and is now growing at about four times the rate of the craft category in Canada. Molson Coors’ hard seltzer portfolio also is making waves in Canada, corralling more than a 12 share of the segment in the last month, “and that’s before Topo Chico Hard Seltzer launched nationally,” Hattersley said.
The company also grew volume in Latin America in the second quarter, driven by growth in Colombia, Chile and Honduras. In Mexico, Coors Light posted double-digit growth and Miller High Life notched a record sales month in June.
Across the Atlantic, Coors is gaining share of the total beer industry in the U.K., and nascent Madri Excepcional continues a torrid run on its way to the most successful beer in launch in the 16 years On Premise Measurement Service has tracked the industry, the company said. It already is one of the top 20 U.K. beers, despite not launching in the off-premise until March.
Economy segment strengthening
In the face of a possible economic recession, Molson Coors continues to see consumers trading up into higher-priced beers, Hattersley said. At the same time, the economy segment also is strengthening in the U.S., with three of Molson Coors’ four key economy brands growing share of the segment in the second quarter. That helped Molson Coors to its best quarterly performance versus the industry in three years.
“We have long held that all segments matter in the beer industry, and it’s never truer than it is in these times,” Hattersley said. Maintaining strong brands for consumers across a range of price points gives the company “the ability to adapt our plans should the need arise regardless of the economic climate.”
‘Well-positioned’ to navigate uncertainty
While the global macroeconomic environment remains a challenge, Molson Coors is “well-positioned … to deliver on our full-year guidance,” Hattersley said.
A timing benefit, waning COVID-19 restrictions in Canada and Europe and a planned U.S. price increase in the fourth quarter to help offset inflation give Hattersley “continued confidence” the company will meet its financial targets in 2022.
“Our plan,” he said, “is working.”