Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Molson Coors Beverage Co (TAP, Financial) reported a successful relaunch of legacy brands in Romania, contributing positively to their portfolio.
- The company has taken full ownership of COBRA, an above-premium brand in the UK, enhancing their premiumization strategy.
- Molson Coors Beverage Co (TAP) is seeing strong growth in Canada with above-premium brand revenue up nearly 15% in the quarter.
- The company is focusing on premiumization in the U.S. by divesting underperforming properties and investing in scalable above-premium opportunities.
- Molson Coors Beverage Co (TAP) has increased its stake in Zola to 51%, aiming to capitalize on the better-for-you segment in the energy category.
Negative Points
- The company experienced softer than anticipated unit industry performance during the peak summer selling season.
- Molson Coors Beverage Co (TAP) faced gross margin pressure largely due to COVID-19 efforts and unit shipment trends.
- The UK market has become increasingly competitive with higher promotional intensity, impacting volumes.
- The company is adjusting its financial outlook to flat to down approximately 1% due to industry challenges.
- Molson Coors Beverage Co (TAP) is dealing with volume deleverage related to unit shipment issues and contract brewing agreements.
Q & A Highlights
Q: Can you explain the impact of shipment plans on your financial volume and how macro pressures have affected your business?
A: The guidance adjustment to down around 1% was mainly due to the challenges faced in July and August. We saw some improvement in September and early Q4. The shipment played out as expected, unwinding the inventory build-up from Q2. We anticipate a couple of hundred thousand barrels to be cleared in Q4, with some brand family lift expected soon. In the U.S., shipments were down 17.9%, with brand volume down 6.2%, and PAT had a 2.6% impact.
Q: What are your observations on the industry backdrop and consumer behavior, and how does this influence your planning for next year?
A: The industry has seen fluctuations due to trading days, weather, and economic impacts. However, recent trends in September and October show improvement. Consumers remain value-conscious, with some channel shifts. Despite this, premiumization continues, especially in the U.S. and Canada. We remain optimistic about our long-term growth strategy, keeping a close eye on consumer confidence.
Q: How did the shelf space reset go this year compared to last year, and what are your expectations for the future?
A: Last year saw significant dislocation in shelf space, which we didn't expect to repeat. Our goal was to retain and increase shelf space, which we achieved this fall. We held onto the space gained last year and even increased it slightly. We expect future resets to involve minor tweaks based on new innovations and slow-moving items.
Q: Can you discuss your marketing investment levels and whether they are sufficient to drive growth?
A: We maintained the same level of marketing investment in the back half of this year as last year, focusing on core brands and innovations. While we don't expect a significant increase in marketing spend, we will continue to invest appropriately to support our brands and innovations like Peroni.
Q: What are your plans for revitalizing Blue Moon and expanding Coors Banquet, and any initial thoughts on COGS per hectoliter for next year?
A: Blue Moon is a top priority, with new packaging and campaigns showing signs of stability. Coors Banquet is growing well, with no capacity concerns. We haven't provided specific COGS guidance yet, but we focus on increasing efficiencies and reducing costs. More details will be shared in our Q4 call.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
