The chief executive of Molson Coors said cost inflation is now his biggest concern after the US brewer experienced a further jump in prices for barley, aluminum and freight.
This upward trend was taking some shine in consumer demand that otherwise appeared resilient despite widespread concerns over rising interest rates, inflation and a potential economic slowdown.
“Consumers have shown themselves to be on many, many recessions . . . to be resilient in terms of beer purchases, so I would choose input costs as the biggest concerns” around inflation, chief executive Gavin Hattersley told the Financial Times. Told.
The Hattersley concern followed a $434 million year-on-year jump in the value of goods sold in the second quarter to $2.1 billion. The maker of Miller Light and Blue Moon beers reported on Tuesday that revenue was barely turning up at $2.92bn.
Hettersley said that about half the jump in costs was due to inflation, and was mainly due to increases in the price of freight, natural gas and inputs such as barley and aluminum. The rest was due to investments in the “premiumization” of the company’s brands.
Hettersley said the brewer had “cushions” as hedges for some of its costs and was deliberately keeping its inventories high of both unfinished goods and inputs, including a year’s supply of barley, in case the supply chain deteriorates. .
Molson Coors has experienced growth in its premium tier and economy segments. Should consumers pull back on more expensive beverages, Hattersley said the company was “ready to pivot” its diversified portfolio of drinks toward more value-oriented options.
Due to the uptick in costs, Molson Coors’ net income fell 88 percent from a year earlier to $47.3 million. Adjusted earnings of $260.1mn slightly exceeded Wall Street’s forecasts, after accounting for some mark-to-market volatility and other costs.
Shares closed down 10.5 per cent in regular trading on Tuesday.