Molson Coors Beverage Company CEO Gavin Hattersley opened today’s third quarter earnings call by reciting what he said are the seven “headlines” of the company’s last three months.
- Coors Light, the company’s biggest brand, is growing share of the total beer category in the U.S., its biggest market, something the brand hadn’t done in five years.
- Molson Coors’ worldwide net sales revenue for above premium products has topped 25% of its brand volume net sales revenue on a trailing 12-month basis, a first since the launch of the company’s revitalization plan about two years ago.
- The company has grown its share of the U.S. above premium segment for two consecutive quarters for the first time in more than five years.
- Through the first nine months of 2020, the company has sold nearly 2 million cases of non-alcohol beverages in the U.S., a first for the company.
- Molson Coors’ market share trends in Canada have improved for eight straight months, and its European business has bounced back to approximately 2019 revenue levels.
- Global supply chain issues impacted the company’s third quarter volumes, however trends have improved in October as weekly shipments are around 1 million barrels in the U.S.
- Headwinds related to transportation availability and costs continue.
Following Hattersley’s narrative for the company’s Q3, an analyst asked him to define what success now means for the company in the U.S. Hattersley replied that “the quality of our revenue and changing the shape of our portfolio is what is important to us now.”
“For me what success looks like over the short-, medium- and long-term is that we were driving sustainable top-line revenue growth, and at the same time driving our profits,” he added. “It’s not an either/or for us. It’s a both/and.”
Two years into Molson Coors’ transformation into a “beverage company,” Hattersley said the company is progressing toward those goals. He cited “a significant milestone” in selling nearly 2 million cases of non-alcoholic beverages in the U.S. through September 30, as it pushes toward its goal of $1 billion in revenue from its emerging growth business by 2023. He added that the company believes it can scale offerings in the water, energy and coffee categories, with brands such as energy drink Zoa in partnership with Dwayne “The Rock” Johnson and ready-to-drink canned coffee with La Colombe Coffee Roasters.
“Growing beyond the beer aisle is no longer an aspiration, we’re doing it and we’re driving scale,” he said.
Since its launch, Zoa has become the No. 1 new energy drink franchise in 2021, and a top 20 energy drink brand in the U.S., Hattersley said. He added the brand is now available through 31,000 outlets, with more than 115,000 points of distribution and more coming online.
“There’s a lot of upside for this brand,” he said.
As for La Colombe, Molson Coors has been able to unlock national distribution in grocery and mass channel stores in early 2022 due to its early focus on distribution in large national retailers.
Hattersley also challenged the “noise” around the slow down in hard seltzer sales in the U.S., which he called largely inaccurate and “unproductive.”
“Hard seltzers are here to stay,” he said. “They’re over 10% of beer category sales and growing. But the segment has matured and the easy growth is over. Moving forward, it is going to take distinctive, differentiated brands in order to succeed and that is why we feel so confident about our portfolio.”
Hattersley believes Molson Coors has that with Vizzy and Topo Chico, which he said is the “fastest growing” hard seltzer portfolio in the U.S. Vizzy grew 50% during the quarter and is now the No. 4 hard seltzer in the U.S. Meanwhile, Topo Chico is the No. 3 new product in the general malt beverage category. Next up is a national expansion for the brand, which initially launched in 16 markets.
“Our ambitions don’t stop at double digit share [in the U.S.], right?” Hattersley said. In Canada, the company is closing in on its 10% share goal with Vizzy and Coors Seltzer, and Topo Chico on the way next year.
“We’re making real progress against our seltzer goals,” he added.
While hard seltzers are “significant and here to stay,” Hattersley said he sees opportunities for growth with ready-to-drink spirits-based brands. The company will compete in the category with its Superbird blue agave tequila-based canned cocktail and possibly future offerings.
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