- Molson Coors is seeing a split emerge among beer drinkers as inflation hurts their wallets.
- Some beer drinkers are trading down to cheaper options like Keystone Light, while others are still willing to pay more for Blue Moon and Peroni beer.
- CEO Gavin Hattersley told CNBC the overall beer industry saw softening sales in the second quarter.
Molson Coors Beverage is seeing a split emerge among its customers as inflation hits their wallets: Some beer drinkers are trading down, while others are still shelling out for pricier six-packs.
Shares of the beverage company closed down more than 10% Tuesday as concerns about the uncertain macroeconomic environment weighed on the stock. The company reported second-quarter earnings and revenue roughly in line with Wall Street’s estimates.
CEO Gavin Hattersley told CNBC that the beer industry saw softening sales during the second quarter, which the company blamed for a 1.7% decline in its U.S. sales volume.
But Molson Coors said it outpaced the broader industry in the U.S., Canada and the U.K. during the period. Hattersley credited strong sales growth for pricier drinks like Blue Moon and Peroni beer, as well as strengthening demand for cheaper beers like Miller High Life and Keystone Light.
A year ago, Molson Coors began trimming its portfolio of lower-priced beers to focus on more other options. Some investors wanted the company to ditch the segment altogether and instead focus entirely on more expensive beers, which have performed better in recent years.
“What some would regard as 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 is obviously not a place I’d like to be as we’re heading into what’s clearly going to be tough times.”
As Molson Coors’ six-packs get more expensive, more consumers could trade down to its lower-priced options. The company raised its prices in the spring by nearly double its usual rate and is considering another round of hikes toward the end of 2022, Hattersley said.
Beer isn’t the only industry seeing a split in in consumer spending behavior. Ferrari reported a record second quarter on Tuesday, fueled by soaring growth for its luxury cars, while Delta Air Lines said demand for premium-class tickets has outpaced that of main cabin tickets. Chipotle Mexican Grill said high-income customers are visiting more frequently, while those making less than $75,000 a year aren’t ordering its burritos as often.
Source: Business - cnbc.com
