Analysis

Analysis - Molson Coors runs the beer race harder

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Analysts have been cheering from the sidelines this week as Molson Coors said at its latest conference that it is running the race to grow its global market share ‘harder and faster’.

Molson Coors has cited cost cutting and premiumisation as keys to the future

Molson Coors has cited cost cutting and premiumisation as keys to the future

A New York afternoon was the setting for the company’s analyst meeting, and subsequent notes have shown some support for the company’s future plans.

Stifel analyst Mark D Swartzberg described the brewer as "an organisation improving its ability to generate and return cash flow from a portfolio of mostly developed markets (US, Canada, UK)".

He agreed with CFO Gavin Hattersley’s assertion that Molson Coors is "running the same race harder and faster".

Nomura’s Ian Shackleton, meanwhile, confirmed that he doesn’t expect "any major change in story at the investor day, despite having a new CEO in place" and Swartzberg agreed that the company's plans predate the appointment of new CEO Mark Hunter, who took up the role in January.

The focus remains on cost-cutting and return-on-capital-employed, with "no new initiatives being announced", according to Shackleton.

Cost savings

Supply chain and plant improvements in Canada are set to bring in a chunk of cost savings and CFO Hattersley told analysts that the US$40 to $60m annual cost-saving target is still in place for its wholly-owned businesses.

"We think this implies conservatism and lift our savings targets," added Swartzberg.

Premiumisation also came up, according to Shackleton, who said the company is looking to increase investment in three categories: premium light, above-premium, and craft, while managing the economy segment for better returns.

"Gaining share in premium light is critical as this market is three times the size of craft in US and drives economies of scale" he says.

It seems, then, that the race for success in global brewing terms is much more of a marathon than a sprint.


Sectors: Beer & cider

Companies: Molson Coors

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