just On Call - MillerCoors to focus on craft beer success
Blue Moon drives craft beer sales at MillerCoors
MillerCoors plans to plough more resources into its newly-created craft and imported beers division in an attempt to mitigate ongoing weakness in the mainstream US beer market.
MillerCoors' president and chief commercial officer, Tom Long, has said today (3 August) that the company plans to "bring even greater focus" to its craft and import beer division.
Craft and imported beers will form a key part of MillerCoors' plan to combat falling demand in the US beer market, which has been exacerbated in the last couple of years by a doubling of the country's unemployment rate.
The brewer, which is 58% owned by SABMiller and 42% held by Molson Coors, today reported slips in beer sales and volumes for the first half of 2010, but its recently-created craft and imports division reported double-digit volume gains over the six months.
Brands such as Blue Moon, Leinenkugel's and Peroni Nastro Azzurro drove growth.
MillerCoors' success reflects buoyancy in the US craft beer sector in general, where sales rose by 12% in value for the first six months of 2010, following on from 9% growth in the same period of 2009, the US Brewers' Association announced yesterday (2 August).
"We see opportunities in craft and imports," said MillerCoors' Long. "Our expectation is that we'll grow dollar share in this sector," he told analysts on the brewer's half-year results conference call.
Despite the rise in craft beer sales, this sector remains small. MillerCoors sold more than 34m barrels of the beer in the first half of 2010, while the craft sector in total achieved around 4.6m barrels.
However, together with imported beers like Peroni, MillerCoors believes it can take value from this market.
Long added that a focus on innovation will compliment the drive on craft and imported beers. For example, MillerCoors plans to launch national television advertising campaign for its Home Draught system later this month.
Gary Leibowitz, senior VP of investor relations at SABMiller, said that MillerCoors has "no intention to reduce marketing spend" in the US, despite a shrinking beer market. However, the company indicated that it plans to use more of its marketing budget to drive new products.
Stringent cost controls, in addition to synergies from the merger of SABMiller and Molson Coors operations, boosted MillerCoors profits for the half-year.
Net profits, excluding exceptional items, rose to US$599.8m, against $510.9m last year, while net sales slipped to $3.835bn versus $3.852bn in the first six months of 2009.
For the US beer market as a whole, MillerCoors said it saw "some improvement" in the on-trade during the second quarter, but added that there was no sign of economic improvement in the country as a whole.
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