Pointing to on-premise closures and capacity restraints due to the COVID-19 pandemic, Molson Coors Beverage Company posted net sales declines for both the full year and the fourth quarter of 2020.
The company’s Q4 net sales declined 7.7%, to $2.7 billion, and its full year net sales declined 8.7%, to $11.7 billion, compared to the same periods in 2019. Nevertheless, Molson Coors CEO Gavin Hattersley insisted those numbers, particularly the Q4 results, don’t “tell the full story.”
“If you only look at that piece of data, you’ll miss it,” he said during a call with investors and analysts. “Our top line results in the fourth quarter were overwhelmingly due to losses resulting from government restrictions in European on-premise channel. To put it more bluntly, Europe alone accounts for 92% of our fourth quarter topline to plan.”
The decline in European business — primarily in the United Kingdom, according to the company’s blog — resulted in Molson Coors recording a $1.5 billion goodwill impairment charge, which drove a net loss of $1.4 billion in Q4.
In North America, Q4 net sales declined 0.8%, to $1.99 billion.Brand volumes declined 6.9% in North America, led by a 13.2% decline in Canada. In the U.S., brand volumes declined 6.2%; shipments (sales to wholesalers) declined 2.3%. However, price increases and shifts in brand and package mixes in the U.S. and Canada drove a 3.1% increase in net sales per hectoliter.
The company’s 2020 U.S. highlights included off-premise sales increases of its biggest beer brands, Coors Light (+6.1%) and Miller Lite (+8.6%). Hattersley said the company was “pleased, but not satisfied with those results,” and added that bigger marketing pushes behind both would follow in 2021.
Stabilizing Coors Light and Miller Lite brands, premiumization of its portfolio and driving innovation in beyond beer, and enhancing its digital capabilities were the pillars of the revitalization plan Molson Coors first announced in October 2019. Hattersley noted that above premium products reached a record high share in the company’s U.S. portfolio and its market share of hard seltzers doubled in 2020.
“Obviously we’ve been very clear about the objective in our revitalization plan of driving our above premium portfolio and our beyond beer portfolio,” he said. “Almost all of the deals we’ve done come at above premium margins.”
Molson Coors announced a dizzying string of deals and partnerships in 2020, including a joint venture with Yuengling to make and sell its beer in the western half of the country (starting in Texas), as well as a flurry of beyond beer projects through its emerging growth division. Those include ZOA (a better-for-you energy drink co-founded by Dwayne “The Rock” Johnson) and a slate of non-alcoholic brands developed with beverage incubator L.A. Libations, in which Molson Coors holds a minority ownership stake. By 2023, Molson Coors hopes to develop its emerging growth division into a $1 billion revenue business.
Another company goal is to reach double-digit share with its hard seltzer portfolio by the end of 2021, Hattersley said.
“We think we’ve got one of the strongest portfolios of hard seltzers, with each brand having a very unique perspective on the category,” he said.
Molson Coors’ hard seltzer portfolio includes Vizzy Hard Seltzer and Coors Seltzer, which both launched last year, and Topo Chico Hard Seltzer (a joint venture with Coca-Cola), and Proof Point, which will debut in early 2021. Vizzy will launch a lemonade seltzer in April 2021, and Topo Chico Hard Seltzer will launch a ranch water.
In the core beer space, Molson Coors found success in 2020 with Blue Moon line extension Light Sky, which sold $28.8 million in off-premise retail stores in 2020, according to market research firm IRI. Coors Pure, an organic light beer, is set to launch next month, but was not mentioned on the call.
To support its core brands and new offerings, Molson Coors’ marketing department has made “numerous pivots,” Hattersley said.
“We shifted our media to places like social gaming, podcasts, online video and so on,” he said, adding that the company has created 40 pieces of new advertising content.
Molson Coors’ e-commerce sales increased 230% in 2020, and the company will continue investing in the channel, Hattersley said.
Despite Hatterlsey’s optimism in the company’s performance, Molson Coors’ stock (TAP) price per declined around 9%, to $44.50.