![#](https://e-malt.com/Images/left_top_corner16x200.gif) | E-Malt.com News article: USA: Molson Coors to discontinue 11 economy brands in premiumization push![Brewery news](https://e-malt.com/Images/BeerBullet2.gif)
Molson Coors is cutting 11 economy brands and discontinuing 100 SKUs as the company ‘meaningfully streamlines and premiumizes’ its US portfolio, BeverageDaily.com reported on August 2.
Magnum and Mickey’s Ice are among the brands that will be cut and the company puts increased focus on its hard seltzer portfolio and other more premium drinks, as part of a wider strategy to revitalize the business.
The company decided it was time to take action on its 'long long tail of its economy portfolio in the US'.
“In recent months in the US, we paused production of a number of smaller low-margin, slow-moving economy brands and SKUs," explained CEO Gavin Hattersley in last week's earnings call.
"This allowed us to improve our brewing efficiency and stabilize inventories of our core brands, and it also premiumized our portfolio and improved our margins, and we intend to maintain that higher level of premiumization and service.
“So, after an extensive analysis of our business, we are meaningfully streamlining and premiumizing our US portfolio, discontinuing around 100 SKUs, including the elimination of 11 economy brands altogether.
"This will improve supply chain flexibility for our more profitable priority brands, enhance our innovation efforts, enable us to better focus resources and ensure dependable and on-time shipments to our distributors. Our local sales teams are partnering with distributors and retailers on a market-by-market basis on exit plans and to identify swaps that make sense."
While premiumization is not a new strategy in the industry, Hattersley highlights it’s a long-term trend and will inform how the company shapes its portfolio now and in the future.
“The headline is simple, premiumization is here to stay at Molson Coors. We're going to invest bigger behind our fast-growing global hard seltzer portfolio, and we're going to permanently streamline our smaller portfolio of legacy brands. We're excited about the progress we're making, and we're not about to stop now.”
Hard seltzers are a strong arm of the premiumization strategy: specifically with Vizzy and Topo Chico Hard Seltzer (via the company’s partnership with Coca-Cola).
Hattersley champions the best brand mix in the US since the inception of the MillerCoors joint venture in 2008. “This significant premiumization of our portfolio was led by the strong growth of our US hard seltzers, where we doubled our share of the US hard seltzer segment in the second quarter.
"We took over as the global brewer with the fastest-growing US seltzer portfolio. And we recently passed another major brewer and are fourth in total US seltzer shares.
“We're also continuing to see strong traction with our Vizzy innovation. Vizzy's fast-turning new lemonade variety pack helped the Vizzy brand gain almost a full point of US share in the second quarter. And we just added another new package to that family, with Vizzy Watermelon, which has been a hit with retailers thus far.
“Topo Chico Hard Seltzer continues to exceed our expectations in the 16 markets in which it's sold in the US. The demand has far outpaced our original plans for the brand, and with supply improving, we are now positioned to be more aggressive in marketing this brand.”
But the premiumization strategy is not as simple as launching more hard seltzers. Hattersley acknowledges that Coors Seltzer is being cut in the US, just 10 months after its launch (the company says launching a hard seltzer as a line extension of a beer brand - as opposed to an independent brand - hasn't worked out).
“We do believe that there will be a shakeout in the near future as many brands struggle to succeed in the crowded space. And while Vizzy and Topo Chico Hard Seltzer continued to accelerate, Coors Hard Seltzer wasn't. And so that's why we made the decision in the US to discontinue Coors Seltzer and commit our energy, our resources, the material supply we've got in our shelf space to Vizzy and Topo Chico.”
In contrast, however, Coors Seltzer will stay in Canada where it has achieved double-digit share in some retailers: with Hattersley describing it as ‘one of the most successful product launches that we’ve had for our company in five years up in Canada’.
While the fast-growing hard seltzer portfolio is credited with driving premiumization, it's not alone, says Hattersley.
“Madri [a European-style lager] continues to exceed expectations in the UK on-premise with unprecedented consumer demand. And Pravha from the Staropramen stable of brands is performing ahead of expectations in the Central and Eastern European markets, beating initial estimates by more than 50%.
"Our Latin America business, where our global brands primarily operate in the above premium price segment, has exceeded expectations given the coronavirus pandemic throughout the region.
“In Canada, our Six Pints craft division is growing absolute volume despite its reliance on the on-premise.
"In the US, Blue Moon LightSky was the number one new beer item in 2020 and has grown double digits this year, building off its strong base, while Leinenkugel Summer Shandy brand volume is up 10% year-to-date.
"Those are outcomes.”
In a few weeks, Molson Coors’ joint venture with craft brewer Yuengling will launch Texas, with
02 August, 2021
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