Dear Client:
Molson Coors chief Gavin Hattersley didn’t beat around the bush in yesterday’s earnings call. The first line out of his mouth was “Look, 2019 was a challenging year for Molson Coors Beverage Company.”
Indeed, there weren’t a whole lot of positive numbers Gavin could point to within the past year for their biggest brands (though Q4 U.S. depletions, at -1.7%, did seem to improve, even adjusting for comp). Still, even with a seemingly slight improvement in Q4, he had to get pretty creative to pat themselves on the back for the past year.
GAVIN’S GYMNASTICS. This line was a piece of art: “As a combination Miller Lite and Coors Light outperformed the combination of Bud Light, Michelob Ultra, and Michelob Ultra Gold in terms of industry share.” (Ed. note: We’re pretty sure he meant in terms of gaining share.)
But obviously, Miller Lite and Coors Light, both of which are losing dollar share, are not outperforming Michelob Ultra and Michelob Ultra Pure Gold, which are both gaining dollar share. But when you bomb Mich Ultra and Pure Gold by throwing Bud Light into that combination, then Gavin’s statement does indeed ring true.
So no, not a lot to hang their hat on in 2019 as far as results go, but 2020 is a new year, and there are a few reasons to feel optimistic about the year ahead for Molson Coors (again, see Q4’s trend).
INNOVATION COMING IN HOT. For starters, they have a load of innovation that’s about to hit or has hit already.
Recall they took their Mich Ultra competitor, Saint Archer Gold, national at the start of the year, and even backed it up with some airtime during the Super Bowl.
Then at the beginning of this month, they launched their Blue Moon line extension Blue Moon Light Sky. The “lighter, more sessionable” Blue Moon, which clocks in at 4% ABV and holds 95 calories, has only been in market for two weeks now, but “so far it’s being extraordinarily well received,” according to Gavin.
(So well received, in fact, that we’re already hearing about out of stocks — some distributors are on allocation, and orders have been cut, as production is out of the 10th Street Brewery and struggling to meet demand. Already. But MCBC communications chief Adam Collins told BBD that while “production of Blue Moon LightSky is exceeding [their] plans,” the team is working to keep pace with the projection-surpassing demands.
“Production continues to grow as a result of those efforts, and last week saw our highest volume production of Blue Moon LightSky to date. And we have additional capital projects in flight right now so more breweries in our network can produce this great tasting new innovation,” he said.)
HOW THEY’LL PLAY IN SELTZER SANDBOX. And next month, they’ll roll their “biggest bid yet on the hard seltzer segment” with Vizzy. They’ll have a “robust campaign” that will launch once STRs commence, Gavin said, that will include “national TV… digital, social, out-of-home advertising and a very strong sampling effort.” Gavin said they’ve received an “excellent response” from their distributors and retailers alike with Vizzy, and added that there’s “a lot of excitement and anticipation for this brand.”
An analyst asked about the possibility of a Coors Light/Miller Lite Seltzer, and Gavin sort of sidestepped the question, saying they want to have “a clear point of differentiation” in the space, which they believe they have with Vizzy, as it is made with Acerola Cherry and therefore contains antioxidant and Vitamin C. But he also said they want take a “multi-pronged approach to attacking [the seltzer] space.” So maybe we’ll see another play from them in this space?
And last but not least as far as innovation goes, they’re taking a crack at the wine space with the national launch of Movo Wine Spritzers.
So a canned wine play, a big seltzer bet, a Mich Ultra fighter, and a better-for-you line extension off the biggest craft brand in the U.S. are all hitting in 2020 from MCBC. Not too shabby.
MCBC NETWORK ENERGIZED. Whether those innovations take off — and whether Molson Coors has the bandwidth to keep supply going if they do — remains to be seen, but knowing that they’re delivering big bets with sizable investments behind them has to make their distribs happy.
Indeed, “I think the speed at which we are moving and the quantity of ideas that we’re bringing to the marketplace has energized our network as — I haven’t seen it this way for quite some time,” Gavin said.
MADE TO CHILL PROVIDING OPTIMISM TOO. And it’s not just innovation energizing the network either, said Gavin. The Coors Light “Made to Chill” campaign has also generated “a lot of support,” and “a lot of excitement” behind the brand. In fact, Gavin said it’s the most excitement he’s seen from distribs around Coors Light in his time as CEO of Molson Coors and chief of MillerCoors as well. He said the early results from the campaign have been “positive” and that in Q4 Coors Light had its best quarter of depletion trends since the first quarter of 2017, but did not put any specific numbers around that performance (see next story).
Still, they plan to “invest meaningfully” behind the campaign in 2020, Gavin said. “It’s brought relevance back to the brand again, it’s back in the lives of new legal-drinking-age consumers. It’s back in the cultural landscape. Its momentum is hitting in the right direction. We’re just getting started.”
SO, EXACTLY HOW HAVE MCBC’S BIG TWO BRANDS IMPROVED?
Don’t suggest to Molson Coors Beverage Company chief Gavin Hattersley that seltzer has negatively impacted Miller Lite and Coors Light.
When an analyst broached that subject on yesterday’s earnings call, Gavin was defiant. But at least he also offered up an explicit read on the brands’ recent quarterly gains.
“I’d point you to the performance of Miller Lite and Coors Light in 2019, when seltzers were exploding,” he said. “According to Nielsen the trend is continued — of gaining share — for those two brands for the last 5 years. Our performance on Miller Lite gained [share of premium lights] its 21st consecutive quarter and it actually grew STR volumes in Q4 in face of this seltzer trend.
“So the brand is holding its own in the total category: in fact it was pretty flat, not just in the premium light segment, but in the total beer category.
“And the combination of Miller Lite and Coors Light outperformed the combination of Bud Light, Mich Ultra and Mich Ultra Gold in terms of industry share. So this notion that seltzer volume is coming from premium light is not necessarily supported by facts” underlying those brands’ performance, he said.
ACTUALLY… THE NO. 1 MEXICAN DRAFT BRAND IS MODELO, THOUGH DOS EQUIS BRAND FAM OUTSELLS MODELO FAM
Yesterday, we reported Heineken USA 2019 results with the color that Dos Equis “remained the number one Mexican beer on draft in the On-Premise nationally.”
Actually, that deserves some context.
The single best-selling Mexican beer brand in draft on premise is Modelo Especial. That’s per Nielsen CGA on premise numbers, the 52 weeks to 11/30/2019.
The Dos Equis brand FAMILY indeed outsells the Modelo brand family on draft in this data set, in volume and velocity. But, again, the single Modelo Especial brand outsells the flagship Dos Equis brand in dollars and volume. And it’s growing, while Dos is relatively flat.
Until tomorrow,
Harry, Jenn and Jordan
“Nice guys finish last, but we get to sleep in.”
– Evan Davis
———- Sell Day Calendar ———-
Today’s Sell Day: 9
Sell days this month: 20
Sell days this month last year: 20
This month ends on a: Fri.
This month last year ended on a: Thurs.
YTD sell days Over/Under: 0
