Molson Coors Sees Consumers Choose Between Premium and Cheap Beer

By Liz Moyer

Investing.com -- Now, inflation is eating into consumers’ beer money.

Molson Coors Brewing Co (NYSE:TAP) said it saw softening beer sales in the second quarter and noticed some customers were making a tradeoff, buying lower-priced brands instead of the premium labels they used to buy. Molson shares dropped 10% on Tuesday.

The observation backs a finding last month by The Wall Street Journal: that consumers were buying more economy beer at the checkout line in recent weeks.

The report cited analysis by beer-industry consultant Bump Williams that retail store sales of economy beer rose 5.4% in the four weeks ended July 2 compared to last year. June’s inflation data showed a 9.1% jump in prices from last year.

At Molson, U.S. sales volume dipped 1.7% in the quarter, Molson’s CEO Gavin Hattersley told CNBC. But there was growth for more expensive brands such as Peroni and Blue Moon as well as for lower-priced Miller High Life. 

Molson has stuck with some of its lower-priced brands, though it has cut back on them. But being in both spaces could serve Molson well “as we’re heading into what’s clearly going to be tough times,” Hattersley said.

Anheuser Busch Inbev (NYSE:BUD), the biggest U.S. brewer, also saw lower volumes in North America for the second quarter, which it reported last month. Shares fell 1.9% on Tuesday.

Sales to retailers fell 3.4% in the U.S. The maker of Budweiser has been putting energy into building its Michelob Ultra brand and its canned cocktails sold under the brand Cutwater.

Boston Beer Company Inc (NYSE:SAM), maker of Samuel Adams and Truly Hard Seltzer, recently slashed its outlook for full-year earnings, citing an ongoing drop in sales of hard seltzer. Its shares fell 2.6% on Tuesday.

Like other brewers, Boston Beer has raised prices since last year and expects that to continue, setting guidance last month for 3% to 5% price increases through the end of 2022.