Molson Coors has raised its full-year underlying pre-tax growth guidance by an additional 10% since its previous guidance, from +23% to +26%, to now +32% to +36%.
The company reported the change with its Q3 earnings results today, noting in a press release that the change was driven “by a healthier U.S. beer industry than previously anticipated, more robust brand volume performance, higher than expected pricing primarily in Canada” and “lower net interest expense due to higher cash balances generating increased interest income.”
The company maintained its net sales growth guidance of high single-digits, but tightened it to “the high end of the range.”
Molson Coors continues to benefit from Anheuser-Busch InBev’s (A-B) declines, now seven months removed from the start of the conservative-led boycott of Bud Light. More than 50 retailers made shelf space changes in late summer/early fall due to “massive shifts in consumer purchase behavior,” and Molson Coors was the biggest beneficiary of those changes, CEO Gavin Hattersley told investors during today’s earnings call.
Molson Coors’ light lager brands Miller Lite and Coors Light gained between 6% and 7% additional shelf space from fall resets, Hattersley said.
“For brands of this size, that is a massive amount of space,” Hattersley said. “In fact, it’s tens of thousands of cubic feet of space.”
It was also the first time in five years that Molson Coors experienced any early adjustments to its shelf space, according to Hattersley.
“Regardless of how some folks might characterize the current environment, those are the facts,” he said.
Hattersley did not specify who “some folks” are. However, Boston Beer CEO Dave Burwick has previously said his company was “not hearing back from retailers that there’s anything significantly different that’s going to happen” with fall resets. And A-B InBev CEO Michel Doukeris said in the company’s Q3 report this week that around 0.8 of Bud Light’s average of 20 facings per store were affected by resets.
“These retailers are smart business people,” Hattersley said. “And when consumer trends shift to the degree they are shifting, retailers have two options: change shelf space allocations to meet the trends, or leave money on the table. And they’re not going to leave money on the table. It’s as simple as that.”
Molson Coors’ core brand momentum has continued into the fall, with Coors Light and Miller Lite both up double-digits in the last four weeks in Circana-tracked off-premise channels, Molson Coors chief communications officer Adam Collins told Brewbound in an email.
“Even more impressive is that as Miller Lite is beginning to lap a period of strong share gains from 2022, the brand continues to gain dollar share week after week and our 2023 industry share remains stable,” Collins continued.
Coors Light and Miller Lite are both on track to “collectively deliver net sales revenue growth for the third straight year,” something that has not happened “since Miller and Coors came together in 2008,” Hattersley told investors.
Coors Banquet volumes were also up nearly +30% in the quarter, while Keystone Light and Miller High Life also gained dollar and volume share, making Molson Coors the No. 1 volume-share gainer in the U.S. beer industry, Hattersley said.
Hattersley also noted that “Bud Light’s actually getting worse” in scan data, as “the brand’s dollar share loss over the last four weeks was more than any four-week period this year.”
“This isn’t a poll or possibility, this is the facts as laid out in Circana, and we believe that the strength is going to continue into 2024,” he continued.
Molson Coors’ Q3 By the Numbers
Q3 Net Sales: +12.4% (+11% in constant currency).
Q3 Net Sales per Hectoliter: +8.9% (+7.6% in constant currency).
- Net Sales, Americas: +10.8% (+11.2% in constant currency), +3.9% per hectoliter, “driven by increased net pricing as well as higher financial volumes, partially offset by unfavorable sales mix and unfavorable foreign currency impacts.”
Q3 Net Revenue: +10% (+$850 million), to $8.9 billion.
Q3 Net Income: +53% (+409 million).
Q3 Depletions (sales to retailers): +1.1%.
- Q3 Americas Depletions: +3.6% (+4.5% in the U.S.), “driven by growth in our core brands” and “partially offset by the timing impacts related to one less trading day in the current quarter and cycling a shift in volume ahead of price increases taken early in the fourth quarter in the prior year.”
Q3 Shipments (sales to wholesalers): +3.2%.
- Q3 Americas Shipments: +6.6%, “primarily due to an increase in U.S. domestic shipments driven by volume growth in our core brands,” which continue to be “impacted by the continued shifts in consumer purchasing behavior largely within the premium beer segment.”
Looking Ahead: No Sign of Share Gains Slowing
For Q4, Molson Coors is expecting “mid-single digit” net sales growth on a constant currency basis, as the company laps “higher than typical pricing taken in late 2022.” The company is lapping a +5% price increase from 2022, above the +1% to +2% range the company is implementing in U.S. markets this year, more in-line with its historical average range.
“The fourth quarter growth rates do not imply a reversal in the trend for our brands in the U.S.,” Molson Coors CFO Tracey Joubert told investors. “In fact, our October brand volume performance is currently outpacing our trends in the third quarter. And we expect continued share growth roughly aligned with what we saw in the third quarter.
“In short, we are not seeing anything that suggests that our market share gains are slowing,” she continued.
Molson Coors expects its U.S. brand volumes (depletions) to outpace its financial volume growth (shipments) in Q4, helped in part by the company ending Q3 with “healthy U.S. inventory levels,” Joubert said.
“This was due to our strong brewery performance, which enabled us to ship ahead of expectations in the quarter,” Joubert said. “And that put us in a great position in the fourth quarter, providing the opportunity to give our employees a much deserved time off around the holidays. And it also allows us to execute planned downtime in the U.S. network for system maintenance.”
“We’ve got a very clear plan on how to keep the share gains,” Hattersley added. “We presented it to our distributors at our national distributor convention, we showed our plans, and honestly the energy around our plans is something I have not seen – not only for Miller Lite and Coors Light, but for everything.
“We believe we can retain the share that has proven to be extremely sticky on every measure that we look at,” he continued.