Molson Coors shares fall as company cites beer consumer spending split

A bottle of Molson Coors Brewing Co. Blue Moon brand beer

Tiffany Hagler Gear | Bloomberg | Getty Images

Molson Coors Beverage is seeing a split emerge among its customers as inflation hits their wallets: Some beer drinkers are selling low, while others continue to shell out for more expensive six-packs.

Shares of the beverage company fell more than 10% in morning trading on Tuesday as concerns over the uncertain macro environment weighed on the stock. The company reported second-quarter earnings and revenue roughly in line with Wall Street estimates.

CEO Gavin Hattersley told CNBC that the beer industry saw sales decline during the second quarter, which the company attributed to a 1.7% drop in sales volume in the United States.

But Molson Coors said it outpaced the industry as a whole in the United States, Canada and the United Kingdom during the period. Hattersley credited strong growth in sales of more expensive drinks like Blue Moon and Peroni beer, as well as stronger demand for cheaper beers like Miller High Life and Keystone Light.

A year ago, Molson Coors began trimming its budget beer portfolio to focus on more popular options. Some investors wanted the company to abandon the segment altogether and instead focus entirely on more expensive beers, which have performed better in recent years.

“What some would consider an Achilles’ heel, in the past, has positioned us perfectly at the moment,” Hattersley said. “Some of our competitors only operate in the premium space, which obviously isn’t somewhere I’d like to be as we head into what’s clearly going to be a tough time.”

As Molson Coors’ six-packs become more expensive, more consumers may opt for its lower-priced options. The company raised prices in the spring by nearly double its usual rate and is eyeing another round of hikes towards the end of 2022, according to Hattersley.

Beer isn’t the only industry seeing a divide in consumer behavior. Ferrari announced a record second quarter on Tuesday, fueled by the meteoric growth of its luxury cars. Delta Air Lines said ticket retrieval for premium class tickets exceeded that for main cabin tickets. Chipotle Mexican Grill said higher-income customers visit more frequently, while those earning less than $75,000 a year don’t order its burritos as often.

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