Molson Coors logs its first sales growth in a decade as turnaround plan takes hold
- Molson Coors Beverage reported annual revenue growth for the first time in more than a decade.
- The company's fourth-quarter earnings fell short of Wall Street's expectations, but its revenue topped analysts' estimates.
- Molson Coors is in the middle of a turnaround that involves expanding its portfolio beyond beer and focusing on higher quality drinks.
Molson Coors Beverage's Miller Lite and Coors Light saw sales growth in 2021 as the company's turnaround plan began bearing fruit.
Shrinking beer consumption in the U.S. has put pressure on brewers, like Molson Coors, whose top brands are Miller Lite and Coors Light. But CEO Gavin Hattersley credited the beers' marketing campaigns for working to buck that trend.
"On a volume basis, we were narrowly down," Hattersley said in an interview. "Volume" strips out the impact of currency and price changes. "We came really close to actually growing those brands in 2021, mostly [hurt] — in my view — because of the surge of omicron in the last six weeks of the year."
After the company reported its fourth-quarter results, shares of Molson Coors rose as much as 5% in Wednesday trading.
For the first time in more than a decade, the Miller Lite owner reported annual revenue growth. Net sales rose 6.5% to $10.28 billion in 2021, a dramatic turnaround from 2020 when net sales declined 8.7% as pandemic restrictions weighed on demand.
Hattersley credited the company's turnaround plan, which involves expanding its portfolio beyond beer, focusing on higher quality drinks and discontinuing brands that weren't selling. More than a year ago, the company even swapped "Brewing" for "Beverage" in its name as part of its shift in strategy.
For the fourth quarter, Molson Coors' net sales grew 14.2% to $2.62 billion, beating Refinitiv estimates of $2.55 billion. But its quarterly profits were under pressure as freight and commodity costs ticked higher. The company reported adjusted earnings per share of 81 cents, falling short of Wall Street's estimates of 86 cents per share.
"We're not immune from them, just like anyone else," Hattersley said, adding the company does hedge against higher input costs.
To combat higher costs due to persistent inflation, Molson Coors raised prices in January and February, earlier than its usual springtime price hikes. The increases were also a little higher than normal levels, he said.
Hattersley said the Covid omicron variant hit demand for drinking at bars and restaurants in the U.K., Canada and U.S. through January. The month also saw weaker demand due to Dry January, a challenge that involves abstaining from alcohol for the month.
In 2022, Molson Coors is forecasting net sales growth in the mid-single digits, excluding currency fluctuations. And before income and taxes and excluding currency changes, it's predicting non-GAAP income growth in the high-single digits. It also raised its quarterly dividend by 12% to 38 cents a share.
The company also said it's ahead of its goal to hit $1 billion in sales by 2023 for its emerging growth categories, which includes nonalcoholic drinks, craft beers and Latin American business. Its nonalcoholic portfolio includes Zoa, an energy drink created by actor and former wrestler Dwayne Johnson; La Colombe ready-to-drink coffee; and CBD-infused drinks sold in Canada.