Molson Coors released its second-quarter financial results today, but following news of a shakeup at the top of the company, the focus of the multinational beer manufacturer’s call with investors and analysts was on the future direction of the company.
Molson Coors CEO Mark Hunter announced Wednesday morning that he plans to retire at the end of September, and Gavin Hattersley, the CEO of U.S. business division MillerCoors, will step in as president and CEO.
Analysts hoping to get a glimpse of Hattersley’s future plans for Molson Coors were largely rebuffed beyond Hattersley saying he will spend the next couple of months charting the course for 2020 and beyond.
“With any CEO, there will be change,” he said. “We need to consider all options that we can take to maximize the future potential of our business and to create additional firepower to put behind our brands and in order for us to innovate.”
Hattersley refused to speculate beyond those remarks. In fact, who will succeed Hattersley as CEO of MillerCoors also remains unclear. Hattersley only offered that the future of the MillerCoors CEO role would be part of his review of “the company structure and its operating model.”
Asked if Molson Coors would potentially consider brand or asset sales under his leadership, Hattersley also declined to speculate.
News of Hunter’s planned exit followed a soft quarter for Molson Coors. Company-wide revenue during Q2 declined 4.4 percent, to $2.9 billion, while year-to-date revenue has declined 3 percent, to nearly $5.3 billion. Global volumes also declined 5.6 percent during Q2.
Hunter cited a “challenging” May and June due to a combination of “weak industry demand” and bad weather.
In the U.S., the company’s Q2 revenue declined 2.9 percent, to more than $2 billion. Second-quarter depletions (sales-to-retailers) in the U.S. declined 4.8 percent, while shipments (sales-to-wholesalers) declined 6.7 percent. Through the first six months of 2019, depletions (-4.3 percent) and shipments (-4.9 percent) are both in decline.
In an effort to turn around declines of its second best selling brand, Coors Light, MillerCoors has launched a new advertising campaign, “Made to Chill,” aimed at Millenial and General Z consumers.
According to Hattersley, new CMO Michelle St. Jacques moved quickly to launch the new creative campaign.
“It feels very distinctive, it feels fresh and it’s unlike anything else you’ve seen in beer,” he said. “The ‘Made to Chill’ platform talks in a language that resonates with young people and builds on occasions that we believe is only going to grow into the future.”
Hattersley also credited St. Jacques with pushing the “pace and speed” of the company’s marketing efforts and shifting its spending to digital and non-traditional media in an effort to reach younger consumers.
“We’re changing where we’re marketing, we’re changing who we’re marketing to and we’re changing the pace at which we’re getting things done,” Hattersley said. “And if you talk to our distributor network, they will concur with that, as far as marketing is concerned.”
On the overall health of the beer category, Hattersley said the industry “needs to evolve quickly and it needs to keep pace” with rapidly changing consumer preferences. He said Molson Coors needs to increase the speed of its innovation pipeline and focus on new consumers with its core brands.
Hunter added that offerings such as Cape Line, Arnold Palmer Spiked, Henry’s Hard Sparkling and Sol — which were not apart of Molson Coors’ portfolio 24 months ago — “will be millions and millions of cases of volume” by the end of 2019.
As for competing in the hard seltzer segment, Hattersley said Henry’s Hard Sparkling is growing “triple digits,” while Cape Line, compared to top-selling brands White Claw and Truly, “is performing meaningfully better” if compared at the same early stage of development.
“The early signs are very good,” he said. “On top of that, we need to more squarely go after the seltzer space with new and unique points of differences in the marketplace.”
Hunter also pointed to Molson Coors’ joint venture with HEXO, Truss, which is on track to launch non-alcoholic, cannabis-infused beverages in Canada, once legalized, during the fourth quarter. He added that the company will monitor other markets, including CBD products in the U.S.
“We anticipate being on that playing field,” he said.
Wall Street responded unfavorably Wednesday to the results. Molson Coors’ stock (TAP) was down about 5 percent, trading just under $54.