Beverage News

MillerCoors reports slight earnings growth in first quarter

SABMiller plc, London, and Molson Coors Brewing Co., Denver, reported underlying earnings growth for MillerCoors for the first quarter of 2010. Favorable pricing, synergies and cost savings offset soft volumes, cost deleverage and commodity cost pressures to deliver a 0.4 percent increase in underlying net income to $217.2 million.

“We successfully grew profit despite a challenging selling environment in the first quarter,” said Leo Kiely, chief executive officer of MillerCoors, in a statement. “As we enter the key summer selling season, we’re investing in brand innovation, chain account focus, execution, quality and people to win in beer. As we continue to deal with economic and competitive pressures, we remain focused on building our brands and managing costs.”

Double-digit growth of low-calorie beer MGD 64 offset the first quarter declines of Miller Lite and Coors Light, the company said. In addition, the MillerCoors craft and import portfolios each grew mid-single digits in the quarter. Blue Moon reported double-digit growth and imported beer Peroni Nastro Azzurro experienced mid-single digit growth despite a soft import category, MillerCoors reported.

Its domestic above-premium portfolio, which includes Sparks, continued to decline at a double-digit rate, the company said. A decline in Milwaukee’s Best contributed to a low-single digit decrease in MillerCoors’ sub-premium portfolio. The portfolio’s Keystone brand reported mid-single-digit growth, however.

The downturn in the U.S. beer market continues to effect MillerCoors, which reported domestic sales to retailers declined 4 percent and a 3.6 percent decrease in domestic sales to wholesalers based on lower retail sales.

MillerCoors also reported total net revenue declined by 0.9 percent to $1.701 billion. Its domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 2.1 percent. Third-party contract brewing volumes increased 2.8 percent, the company said.

The company also saw a 5.9 percent increase in cost of goods sold per barrel. This increase was attributed to significant increases in the commodity costs of malt, corn, packaging materials and higher fuel costs. The cost of goods sold per barrel continues to be negatively impacted by the absorption of fixed and semi-variable costs across lower production volumes, MillerCoors said.

In the quarter, MillerCoors reported synergies and cost savings of $60 million, which brings the company’s cumulative synergies and cost savings to $409 million since July 2008. MillerCoors reported its brewery optimization project is more than 90 percent complete. The next phase of supply chain integration will include the realignment of quality, engineering, packaging, manufacturing and supply chain development teams, it said.

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Social media has become a buzzword for not just American consumers but also the business environment. Companies are turning to various social media channels to create brand awareness or possibly boost retail sales. Beer brands also are turning to social media to make their stories heard. Brand Chorus, a division of New York-based TippingGardner, conducted a Beer StoryScore Index for Beverage Industry. StoryScore is a quantitative measure of a brand’s storytelling through social management based on creativity, strategy and personality.

Click here to view infographic in PDF format.

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