Molson Coors reaffirms guidance for 2021 and notes progress on revitalization plan despite first-quarter challenges

Molson Coors Beverage Company today said it continues to make progress on its revitalization plan and reaffirmed its financial guidance for 2021 despite three “unprecedented” events that disrupted its operations for part of its first quarter.

“The first quarter was not the quarter that we expected to have,” said Molson Coors CEO Gavin Hattersley, in a call with analysts.

He pointed to a trio of events: A cybersecurity incident that caused a global system outage; a devastating winter storm in Texas that forced utility companies to cut power to Molson Coors’ Fort Worth brewery; and pandemic-related government restrictions that shut down the on-premise channel in the U.K. and in much of Canada.

“To say that all of these events happening in a single quarter is unprecedented would be an understatement. But while we can’t control the weather, across the business we executed well on what was in our control,” Hattersley said. “We are making progress on the things that are within our control, and we are delivering against our revitalization plan.”

Despite those unforeseen challenges, the company reaffirmed its financial guidance for 2021, projecting top-line growth for its fiscal year. Molson Coors also said its “current expectation is that (its) board of directors will be in a position to reinstate a dividend in the second half of 2021.

“We remain focused on reducing debt, investing in our business and returning cash to shareholders,” said Molson Coors Chief Financial Officer Tracey Joubert.

For its first quarter, Molson Coors reported net income of $84.1 million, or 39 cents per share, on net sales of $1.9 billion.

Sales dropped 9.7% compared to the year-ago quarter, due in part to performance in Canada and the U.K., where sustained government restrictions to on-premise venues such as bars, restaurants, taverns, pubs and stadiums were in effect to help curb the spread of the novel coronavirus. Results also were hurt by unfavorable shipment timing in the U.S. related to the March cybersecurity incident, the winter storm that hobbled its Fort Worth brewery and lower contract volumes.

Still, Hattersley said, the company sees brighter days ahead.

He noted that restrictions for on-premise venues in the U.K. began easing in the second quarter as more people have received vaccinations, helping push Molson Coors’ volumes in that country up double digits versus the same period a year ago. 

And in April, the company’s weekly shipments in the U.S. topped 1 million barrels for the first time in nearly a year. Its U.S. sales to retailers are up mid-single digits over the most-recent four-week period, as the company works to get its core brands back to stable inventory levels before Memorial Day, Hattersley said.

Hattersley also said the company has made progress with key initiatives, including building on the strength of its core brands.

Coors Light, for instance, finished the first quarter with its strongest category share performance in the U.S. since the first quarter of 2017. And, together with Miller Lite, the two brands outperformed the combination of Bud Light and Michelob Ultra in U.S. industry share performance versus the same period a year ago, according to IRI.

Coors Banquet, meanwhile, posted its best quarterly sales in more than four years in the U.S.

The company also continued to bolster its portfolio of above-premium beverages, helping grow its share in the U.S. hard seltzer sales seltzer segment by more than 50% since the start of the year, per IRI data.  

That was led by the launch of Topo Chico Hard Seltzer, sales of which skyrocketed out of the gates to help the brand corral a 3.2 share of the U.S. seltzer category in the first week despite launching in just 16 markets.

Another hard seltzer, Vizzy, secured a spot on IRI’s top ten growth brands in the U.S. for the quarter, and made steps to continue its momentum with the release of a second variety pack in March. A few weeks later, it launched Vizzy Lemonade, which ranks as the second-fastest-turning lemonade seltzer in the U.S. market.

On the craft side, Blue Moon LightSky ranks as the top volume-share gainer in U.S. craft in 2021, and Hop Valley made its national debut in the U.S. and Canada.

Molson Coors also said it is making significant inroads into beyond beer categories with the energy drink ZOA and the No. 1 above-premium player in ready-to-drink coffee, La Colombe.

ZOA is making its way onto retail shelves now, where it is “positioned to take a meaningful share of the ($16 billion) category within a matter of months,” Hattersley said. The brand is slated to have more than 80,000 points of distribution by Memorial Day and nearly 150,000 by the end of the summer.

La Colombe, meanwhile, is ahead of plan on all distribution targets, Hattersley said.  

Truss Canada, the company’s Canadian joint-venture with Hexo Corp., holds the No. 1 dollar-share position in the country, with six of the top 10 cannabis beverage SKUs.

Taken together, Hattersley said, the company’s progress reshaping itself “gives me confidence we will achieve long-term top-line growth. And that is what tells me the future of Molson Coors is bright.”