Molson Coors makes significant marketing cuts as bar sales vanish

Molson Coors will “significantly” cut marketing spending while slashing capital expenditures by $200 million this year as it deals with sales fallout from the coronavirus, the brewer stated today in its first quarter earnings report. The maker of Miller Lite, Coors Light and Blue Moon got a big bump from sales at grocery stores as people stocked up on beer after stay-at-home orders went into effect in March. But this so-called pantry loading has since slowed, executives reported today. What’s worse, the brewer’s sales at bars and restaurants—which accounted for 23 percent of its net sales last year—has been cut to virtually nothing, with most establishments shut down. As a result, North American sales plummeted 14 percent in the first four weeks of April, the company reported. For the quarter ending in March global net sales fell 8 percent, resulting in a net loss of $117 million. The pandemic has altered beer-buying habits in significant ways: Sales of economy brands like Keystone Light are doing better than more expensive craft brands, while mainstream offerings like Miller Lite and Coors Light are holding their own, executives said on an earnings call. At the same time, e-commerce channels are doing well and purchases of large-pack sizes are strong. To adapt, the brewer is overhauling its marketing spending to push what is selling and cut back on what is not, while changing its media investments to match where consumers are spending their time. That includes taking money away from cinema and out-of-home, while focusing on investments in social media, gaming, podcasts, online video and OTT—which refers to content delivered on internet-connected TVs—Molson Coors CEO Gavin Hattersley said on the earnings call. “We will be eliminating marketing spend that doesn’t add any value at this point in time,” he said, like investments in bar and restaurant programs. “We were expecting a large increase in marketing spend in 2020, [but] I don’t think we can expect that right now.” The brewer is also delaying the launch of its planned Coors Light seltzer line extension to the fall; it was originally slated to debut in July. And it has shifted the tone of its creative. Earlier this week, Coors Light debuted a new campaign from DDB Chicago that plugs the beer as a pandemic coping aid, while comparing the current situation to other hard times, like the Great Depression and Revolutionary War. The moves are similar to cuts made by other big beverage brands, which are dealing with an unprecedented situation where their store sales are strong, but activity in venues like sports arenas, stadiums and festivals has completely vanished. Earlier this week, for instance, PepsiCo executives said the marketer would reduce all “nonessential advertising and marketing spend.” But Molson Coors is dealing with another shock to its system—in February an employee at its Milwaukee brewery campus gunned down five co-workers before killing himself. The shooting forced the company to shut down the facility for a week, leading to shipping disruptions. Negative publicity later came with reports that in 2015 a noose was found on the locker of the perpetrator, an African American man named Anthony Ferrill, suggesting racial tensions. Reflecting on the tragedy during the earnings call today, Hattersley said it “changed the employee experience in our company forever,” adding, “people lost a sense of security and the culture issues that were raised following this shooting must be addressed, and they will be addressed.” The brewer, he said, has conducted listening sessions and hired a new diversity and inclusion director. The job is filled by Steven Brown, who came from General Electric Healthcare and has “extensive HR experience,” according to a Molson Coors spokesman. “We will continue taking meaningful long-term action to help build our culture and ensure we have a more diverse and inclusive workplace,” Hattersley said.

Molson Coors makes significant marketing cuts as bar sales vanish

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