Molson Coors reports revenue and profit slump in third quarter 2017
Craft beer, spirits and wine seem to have munched into Molson Coors business. During the third quarter 2017, net sales for Molson Coors Brewing fell 2.1 percent to USD 2.88 billion, compared to USD 2.94 billion in the same period last year, the company reported on 1 November 2017.
Income dropped four percent to USD 289.7 million versus USD 300.3 million a year earlier.
In the July-to-September quarter, international net sales increased 96.7 percent to USD 65.7 million, while those in the US declined 5.5 percent to USD 1.89 billion, the company said.
Beer volume was 26.3 million hl, a drop of 4.8 percent, following reductions in distributors’ inventories, contract brewing and brand volumes.
Molson Coors’ third-quarter results echo recent problems facing competitors Boston Beer and AB-InBev. Innovations and overseas sales may help prop up the bottom line, but when the core business in the US is in a slump – and Molson Coors draws nearly 70 percent of its revenue from the US – it is clear that significant challenges remain.
The problem for major brewers is simple, media say. A growing number of consumers have gravitated toward trendier craft brews with bold flavours. In addition, a growing number of drinkers is turning to spirits and mixed drinks in place of beer.
To help keep pace, both Molson Coors and AB-InBev have acquired craft beer companies. Last year, Molson Coors’ US division, MillerCoors, acquired a majority stake both in Revolver Brewing Co. (Texas) and in Terrapin Brewing Co. (Georgia). These acquisitions, however, comprise just a fraction of the brewer’s overall business. There is also evidence that craft beer sales are slowing.
Given these changing dynamics, Molson Coors is seeing challenges in its core business. Molson Coors did see positive growth in Europe, where brand volume increased 9.5 percent for the third quarter, plus a one percent sales hike in Canada. While helpful, it is not enough to compensate for the problems it is facing in the US, its biggest market.
