North America seems to be straying away from Molson Coors with the beer maker reporting a brand volume decrease of 4.8 in the US for its second quarter. This problem might really affect the company considering the US makes up around two-thirds of the company’s sales, making it the company’s largest market.
However, sales in Europe and other international markets don’t seem to be suffering. According to AB InBev, revenues had fallen 3.1 percent during the most recent quarters – Bud Light and Budweiser are also losing market share. It seems like consumers from Canada and the US are buying as much from brands such as Miller Lite and Coors Lite. Since the US makes up so much of the Molson Coors market, the company needs to improve their operations in these countries. The company CEO said they are aggressively addressing this issue.
“We were pleased with the sequential improvements in the second quarter for top and bottom line results. Our full year underlying cost savings and free cash flow guidance has not changed, despite ongoing industry demand challenges in the US and Canada and inflationary pressures. While we are aggressively addressing our volume performance in North America, performance in our Europe and International business was strong in the quarter,” CEO Mark Hunter said.
Molson Coors isn’t the only beer maker suffering. It seems that Americans are generally going for imported products like craft beers, spirits and wines from Mexico. In addition, consumers are also looking for low-calorie and low- or no-alcohol beverages to fit into the recent health trend. This hasn’t gone unnoticed by the company. The beer maker does seem to be attempting to keep up its sales by investing in products that may peak consumer interest.
One example of this would be Molson Coors recent interest in the cannabis market. The company has allegedly been reaching out to Canadian cannabis companies regarding potential investments. A partnership would help the company enter the cannabis market well before the actual legalization date which is scheduled for October 17, 2018. In fact, it was found in a report by Cowan & Co that consumers might substitute alcohol with cannabis and that the consumption of alcohol is expected to decrease in the US.
“Our analysis found that adult-use cannabis states also have consumers that report meaningfully lower quantities of alcohol consumed per binge drinking season, relative to medical and non-cannabis states,” Senior Analyst at Cowen & CO, Vivien Azer said.
Molson Coors has also introduced “Two Hats,” a new light beer. The beer that comes in pineapple and lime flavors has quirky ads that appeal to millennials and is known as “Good, Cheap Beer” to appeal to their budgets. In addition, the company is also entering the non-alcoholic beer market. Their product called “Coors Edge” is a premium product which is double brewed and only 45 calories per can. This can be ordered online from Amazon.ca.
“Now more than ever, we all seek options but not at the expense of convenience – this new offering sits at the intersection of those consumer demands: a spot for delicious, non-alcoholic beer in your Amazon shopping cart, ordered from the comfort of wherever-you-are,” senior manager of e-commerce and digital at Molson Coors, Tonia Coletta said.
The company is very clearly trying to stay relevant in the North American market, however it’s still unclear how successful these attempts will be.