Molson Coors Beverage Co. reported its highest top-line growth figure in more than a decade in the first quarter, buoyed by revenue growth of its two top-selling brands – Coors Light and Miller Lite – a strong performance among its above-premium portfolio and significant growth in Europe due to fewer on-premise restrictions.
The company booked both double-digit revenue and profit growth in the quarter ended March 31, 2022. It marks the third consecutive quarter it has posted top- and bottom-line gains versus the year-ago quarter, a string of success CEO Gavin Hattersley said was supported by continued progress against initiatives set in motion by the company’s revitalization plan.
“Many of our core brands continued to outperform their peers, we again earned the largest growth in U.S. hard seltzers among major brewers and our expansion beyond beer continued to track ahead of our $1 billion revenue target,” Hattersley said. “All were factors in delivering not just a successful quarter, but the most quarterly top-line growth this company has had in more than 10 years.”
First-quarter net sales revenue rose to $2.21 billion, up 16.7% compared with the year-ago quarter. Underlying income before income taxes grew 385.5% to $83.5 million, or 29 cents per diluted share, up from $17.2 million, or 1 cent per share, in the first quarter of 2021.
The results, Hattersley said, give Molson Coors “continued confidence in our ability to meet our full-year guidance” of top-line and bottom-line growth, 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 strengthen
Once again, the company’s core brands led the way.
In the U.S., both Coors Light and Miller Lite grew revenue for the quarter, generating their best combined industry share performance in five years.
In Canada, Coors Light grew share of the beer category.
And in the company’s European and Asia-Pacific business unit, revenue nearly doubled from 2021 and exceeded first-quarter 2019 levels. Sales were led by its portfolio of “national champion” brands, which booked significant improvement with the reopening of pubs in the U.K., where beer sales returned to 98% of pre-pandemic levels.
Above-premium brands take flight
Fueled in large part by the national launch in the U.S. of Topo Chico Hard Seltzer, the fastest-growing major hard seltzer brand in America, per IRI, Molson Coors has grown its share of net sales revenue in the above-premium segment for five straight quarters. These higher-priced brands now represent more than 26% of trailing-12-month net sales revenue across the company’s global portfolio.
Molson Coors’ portfolio of hard seltzers also continues to make headway in Canada, led by the “impressive performance” of both Vizzy and Coors Seltzer. With Topo Chico Hard Seltzer launching this month, “we expect to see those results only improve further,” Hattersley said.
Above-premium beers also have momentum globally.
In Central and Eastern Europe, Staropramen’s Praha has proven such a hit that it has now launched in Romania, which has the potential to more than double its annual sales.
Madrí Excepcional, meanwhile, is performing “well beyond expectations,” earning a spot as one of the top 25 beers in the U.K. with distribution in more than 6,000 on-premise accounts, Hattersley said.
In Canada, Molson Ultra has surged up 47% in volume growth from 2019 to 2021, and its portfolio of craft beers under Six Pints Collective have posted impressive growth, outperforming the craft segment.
And in the U.S., both Blue Moon and Peroni posted double-digit net sales revenue growth in the first quarter, benefitting from the on-premise recovery, as well as strong results at retail.
ZOA leads beyond beer aspirations
Hattersley said the company is “well on track” to achieve $1 billion in revenue in its emerging growth division by the end of 2023, driven in part by the ascendance of the energy drink ZOA.
The Dwayne “The Rock” Johnson-backed energy drink brand booked record sales in March and continues to climb the list of top-selling energy drink brands in the U.S.
La Colombe, meanwhile, finished the quarter up 17% in dollar share, outpacing the overall ready-to-drink tea and coffee category, which was up 1%, per IRI.
Finally, Five Trail whiskey, Molson Coors’ first full-strength bottled spirit, expanded into two additional U.S. markets after a strong performance in its initial four markets.
Optimism despite uncertainty ahead
Calling inflation a “real and growing challenge” that “will worsen over the course of the year,” Hattersley said Molson Coors continues to benefit from hedging and cost-savings programs to mitigate those effects.
The company’s shift into more higher-priced, higher-margin products also is paying off – and that’s even if high inflation exerts more pressure on consumers throughout the year. “In our biggest global markets, consumers continue to trade up, not down. While it may seem counterintuitive, this trend is consistent with consumer behavior in the recent economic downturns,” Hattersley said.
But should consumers seek to trade down into less-expensive products, he said, the company’s refocused economy portfolio is “well-positioned to capitalize.”
On top of that, the company remains optimistic it is well-positioned through the balance of the year with strong product inventory heading into the summer peak season and a robust, double-digit increase in marketing spend for the second quarter to boost consumer demand, said CFO Tracey Joubert.
“These are dynamic and uncertain times, but what’s clear is that we have built our business to manage through challenging times,” Joubert said. “Our demonstrated operational agility through the pandemic, our dramatic improvements to our financial flexibility, our successful cost savings program that has served to fuel targeted investments to support our core brands and key innovations – have all further strengthened our business as we continue to drive toward our goal of sustainable long-term top and bottom-line growth.”