World: Molson Coors Beverage Company sees 15.1% decline in Q2 2020 revenue
As the effects of the COVID-19 pandemic on the on-premise channel continue to be felt worldwide, Molson Coors Beverage Company reported $2.5 billion in net revenue for the second quarter of 2020, a 15.1% decline compared to the same period last year.
In the U.S., the company’s Q2 brand volumes declined 5.2%, while domestic shipments (sales-to-wholesalers) declined 6.5%. Molson Coors’ total North America brand volumes declined 7.8%, due to “aluminum can supply and other packaging material constraints,” according to the company’s quarterly earnings release.
“Consumer demand has shifted in a way no one could have foreseen six months ago, when bars and restaurants were shuttered in the early part of Q2 and demand for kegs in the U.S. went to zero,” CEO Gavin Hattersley said in a conference call with investors and analysts. “Conversely, demand for cans went through the roof.”
Molson Coors expects can shortages to be a problem in Q3 too, as the company builds inventory to meet consumer demand for two of its new, popular offerings Vizzy Hard Seltzer and Blue Moon Light Sky, with both packaged in 12 oz. slim cans, global chief financial officer Tracey Joubert said. Next month, the company will launch another slim can offering: Coors Seltzer.
During the quarter, the company cut its marketing general and administrative spending by 31.9%. Hattersley said Molson Coors is “preserving the biggest firepower in our marketing budgets” for the back half of the year. Those marketing investments are coming to light in the form of a new television ad campaign to support Vizzy, the launch of Coors Seltzer and the company’s partnership with the NFL’s Las Vegas Raiders.
Year-to-date through July 12, off-premise dollar sales of Blue Moon Light Sky have totaled $21.6 million, while Vizzy sales have reached $21 million, according to market research firm IRI. Portfolio-wide Molson Coors sales in off-premise retailers are up 7.1%, to $4.2 billion, compared to the same period last year.
Vizzy launched in April in the increasingly crowded hard seltzer segment and has attained 1.8% market share, according to the National Beer Wholesalers Association chief economist Lester Jones, who shared the data in a recent webinar. That makes Vizzy the seventh largest hard seltzer brand nationwide, behind Mark Anthony Brands’ White Claw, Boston Beer Company’s Truly Hard Seltzer, Bud Light Seltzer, Corona Hard Seltzer, Smirnoff Seltzer and Natural Light Hard Seltzer.
“I think it’s clear that this hard seltzer segment, it’s going to be a huge segment, and there’s room for multiple brands and multiple solutions,” Hattersley said. “From our perspective, we’re making sure that we’ve got very clear point of difference.”
Vizzy contains acerola cherries, which provide vitamin C, an antioxidant. Coors Seltzer will check in at 90 calories and 4.5% and be sold in variety 12-packs of 12 oz. slim cans, with 16 oz. and 24 oz. single-serve cans of its black cherry flavor. Other flavors include lemon lime, mango and grapefruit.
“People are, in this coronavirus pandemic, turning to known and trusted brands and the Coors brand is the best fit to play in the space based on our testing, particularly with its Rocky Mountain freshness and water heritage,” Hattersley said.
Coors Seltzer will be “the first hard seltzer with a social mission,” Hattersley added, as the company is partnering with Change the Course, a water conservation organization. (Wild Basin Boozy Water, Oskar Blues’ hard seltzer offering under craft rollup CANarchy, also donates a portion of its sales to the Can’d Aid Foundation, which sponsors cleanups of lakes and rivers.)
To secure shelf space for Coors Seltzer, Hattersley said he expects new entrants to take space from “underperforming items, which right now include craft and certain slower moving FMBs.”
“It shouldn’t be coming at the expense of the fast moving economies and premium lights,” he continued.
Coors Light, the company’s best selling premium light beer, reached its highest market share ever in the U.S. during the quarter. Year-to-date, dollar sales of the brand are up 8.5%, to $1.278 billion at IRI-tracked multi outlet and convenience stores through July 12. The company has seen “huge demand” for large format packages of Coors Light, Hattersley said.
30 July, 2020
