London-based SABMiller plc and Molson Coors Brewing Co., Denver, reported that its joint venture MillerCoors experienced a second quarter underlying net income decline of 3.8 percent to $468.8 million versus the same period in the prior year. This decline was primarily driven by the timing of shipments because of year-over-year calendar shifts, partially offset by lower cost of goods sold, higher net pricing and positive sales mix, the company says.
First half underlying net income, which was not as significantly affected by the timing of shipments, increased 6.2 percent. For the second consecutive quarter Coors Light and Miller Lite together delivered flat sales-to-retail (STR) volume in a declining segment, while overall MillerCoors STR volume decreased 1.7 percent in the second quarter, driven primarily by the company’s Below Premium brands, it adds.
“For the first time in many years, we are in line with our volume expectations through the first half of the year,” said Gavin Hattersley, MillerCoors chief executive officer, in a statement. “The second quarter started slow, but we finished strongly in June, driven by our two American Light Lagers, Coors Light and Miller Lite. Another indication of the positive traction we’ve gained was finishing No. 1 in the 2016 Tamarron Supplier Survey — which polls hundreds of U.S. distributors in rating the performance of beer, wine and spirit suppliers — for the first time in the history of the joint venture. Our entire system is energized by our performance, and we are all looking forward to continuing our hard work to deliver a successful summer selling season.”
Although Coors Light and Miller Lite combined to deliver flat STR volume for the second consecutive quarter, total MillerCoors Premium Light STRs finished the quarter down low-single digits, driven by the discontinuation of Coors Light Citrus Radler and a high-single-digit decline of Miller64.
Miller Lite gained share of the premium light segment for the seventh consecutive quarter, while STRs were flat. The brand’s strong performance can be attributed in part to its “Spelled different because it’s brewed different” marketing campaign, as well as its “Americana” packaging, which launched in May to drive display and features during key summer weekends, the company says.
Coors Light gained share of the premium light segment for the fifth consecutive quarter, and STRs were up low-single digits in the quarter, which was its best quarterly performance since the fourth quarter of 2012, it states. The brand continues to build momentum as beer drinkers positively respond to its new positioning, which celebrates the perseverance that makes climbing your personal mountain worthwhile, it says. The Climb On advertising that supports this positioning launched in late January, and additional marketing plans have followed, including the Coors Light summer virtual reality on-premise and Full Court reFresh programs, according to the company. In addition, the brand’s conversion to its new visual identity continued its successful rollout across all consumer touchpoints.
Total MillerCoors above premium STRs finished down low-single digits, despite continued growth from Henry’s Hard Soda. According to New York-based Nielsen, Henry’s was the No. 1 Hard Soda franchise in the quarter with Henry’s Hard Orange the No. 1 orange and Henry’s Ginger Ale the No. 1 ginger ale. The Redd’s family declined mid-single digits, as double-digit growth of the Wicked brands and the introduction of Blueberry Ale were more than offset by declines across the balance of the Redd’s portfolio, the company says.
The MillerCoors Tenth & Blake portfolio finished the quarter down mid-single digits. The Blue Moon Brewing Co. STRs declined mid-single digits, led by double-digit declines in Blue Moon seasonals. The Jacob Leinenkugel Brewing Co. STRs were down low-single digits, but were partially offset by low-single digit growth from its Shandy portfolio, driven by Grapefruit Shandy. The continued success with this relatively recent product introduction means that nine out of 10 shandies now sold in the United States are from Leinenkugel’s, the company says.
In the premium regular segment, Coors Banquet gained segment share and grew STR volume low-single digits for the quarter and remains on target for a tenth consecutive year of growth. According to Nielsen, Coors Banquet remains the only national premium regular brand that is growing. The brand aims to continue its momentum through increased marketing investment and the new How it’s Done advertising campaign that reinforces its Western roots, it says. The growth from Banquet partially offset a high-single digit decline for Miller Genuine Draft, resulting in the premium regular segment finishing down low-single digits for the quarter.
The MillerCoors below premium portfolio decreased mid-single digits for the quarter, driven by a high-single-digit decline of Milwaukee’s Best and mid-single-digit declines of Keystone and Miller High Life. Although Icehouse grew low-single digits for the third consecutive quarter, the Steel Reserve franchise was down low-single digits; however, the Steel Reserve Alloy Series grew mid-single digits for the quarter, led by Hard Pineapple.