Forget product, price, promotion, and all that. For Molson Coors Beverage Company, 2020 has been defined by three words that start with the letter P: persistence, perseverance and progress, CEO Gavin Hattersley said during the company’s third quarter earnings call today.
“The challenges throughout the year presented a lot of new obstacles, for us and every other business around the world,” he said in a press release. “But we met each challenge head on and we never lost sight of our goals or the path we set out on early in the year. Now we are showing what’s possible when we execute that plan and it’s our strategy that will allow us to reach further as we drive toward top-line growth.”
In Q3 2020, Molson Coors’ net sales declined 3.1%, to $2.753 billion, compared to the same period last year, driven by a 12.2% decline in net sales in Europe, where the company has “more significant exposure to the on-premise channel.” In North America, Molson Coors’ net sales declined 1%. In the first nine months of 2020, the company’s net sales are down 9.1% worldwide.
In the U.S., Molson Coors’ depletions (sales to retailers) declined 5.3% and shipments (sales to wholesalers) declined 3.9% “due to on-premise outlet restrictions as well as packaging material constraints contributing to declines in the economy and premium segments.” The company expects Q4 shipments to increase as it works to increase distributors’ inventories.
Molson Coors’ net sales per hectoliter increased 4.6% in the U.S., driven by sales of new offerings Vizzy Hard Seltzer, Blue Moon Light Sky and Coors Seltzer. Year-to-date through early October, Vizzy’s dollar sales have reached $51.3 million and Light Sky’s have reached $36.4 million at off-premise retailers tracked by market research firm IRI. Both brands launched in the spring. Coors Seltzer, the launch of which the company announced with a press release on October 6, squeaked into IRI scan data with $3.8 million in sales.
The company is doubling down on these new product lines by expanding its hard seltzer production capacity by more than 400%, at least in part to prep for the launch of its joint venture with Coca-Cola to produce and sell Topo Chico Hard Seltzer next year. It’s also increasing production capacity for Light Sky by 400%; the brand extension has been incremental to Blue Moon, Hattersley said. And, because all these new offerings come in 12 oz. slim cans, Molson Coors has commissioned a new production line for the cans at Rocky Mountain Metal Company, a JV between Molson Coors and leading aluminum can manufacturer Ball Corporation. The new line will be capable of producing 750 million cans.
Molson Coors has set its sights on peeling off a 10% share of the hard seltzer segment, which is overwhelmingly dominated by two lead brands: Mark Anthony Brands’ White Claw and Boston Beer’s Truly Hard Seltzer.
“Despite some of what you might have read recently, we don’t see it slowing down meaningfully,” Hattersley said. “Fifty percent, 75%, 100% growth in 2021 — there isn’t another part of the beer category or industry that has that kind of growth potential.”
Another goal is to grow the company’s emerging growth division to reach $1 billion in sales in the next three years. To get there, the division will need to grow by 50%, Hattersley said. Included in emerging growth are Molson Coors’ non-alcoholic innovation partnership with L.A. Libations; Truss, its joint venture with Canadian cannabis company HEXO; its wine and spirits department, which has MoVo canned wine spritzers; and Tenth and Blank, Molson Coors’ craft arm.
Q3 marks one year since the announcement of Molson Coors’ revitalization plan, which consolidated the company’s corporate structure, cut hundreds of jobs and eliminated its Denver office, with the goal of reinvesting $150 million annually to grow its core products, above-premium selection and beyond beer offerings.
“Our revitalization strategy was designed from a structure point of view to take cost out of our business so that we could actually invest in marketing,” Hattersley said. “What you’re seeing now is a delivery of that exact strategy.”
Year-to-date, two of the company’s core brands — Coors Light and Miller Lite — have increased off-premise sales by 6% and 9.5%, respectively, the company said. This marks 24 consecutive quarters of market share growth for both brands, according to Nielsen data, Molson Coors said.
Asked how Molson Coors is keeping these brands top of mind with distributors, Hattersley pointed to recent marketing work. The company has invested in marketing and advertising for both brands, with efforts that include the Coors Light “Made to Chill” campaign, which touts the beer’s refreshment characteristics and connects to cultural touchpoints with a sweepstakes to send drinkers to the far flung locales featured in their video conferencing backgrounds, and Miller Lite’s sports-related activations, such as its “cantenna” to help drinkers stream football games using a beer can.
“Overall, in this environment, we’re very pleased with the strength and the share gains both of those brands have gained,” Hattersley said. “From a distributor mindshare point of view, Coors Light and Miller Lite are really big, meaningful parts of our distributors’ houses, and they like what we’re doing on those two brands.”
Year-to-date, Coors Light’s dollar sales have increased 6.7%, to $1.896 billion, at off-premise retailers through October 4, according to IRI. Miller Lite’s dollar sales have increased 9.1%, to $1.733 billion.
Dollar sales of Molson Coors’ total portfolio have increased 5.4%, to $6.176 billion, at off-premise retailers, according to IRI.