Molson Coors Beverage Co. is eliminating 11 “economy” brands and discontinuing about 100 SKUs (stock-keeping units) in an effort to streamline its U.S. portfolio and focus on higher-end brands in its lineup.
The eliminated brands are: Milwaukee’s Best Premium, Henry Weinhard’s Private Reserve, Keystone Ice, Hamm’s Special Light, Keylightful, Icehouse Edge, Magnum, Mickey’s Ice, High Life Light, Steel Reserve 211 and Olde English HG 8000.
The company says it’s working with distributors that will be impacted by the end of certain brands.
“Premiumization is here to stay at Molson Coors,” said Gavin Hattersley, chief executive of Molson Coors
on the company’s most recent second-quarter earnings call, according to a FactSet transcript.
See: Hard seltzer consumption slows as consumers head back to bars
“We’re going to invest bigger behind our fast-growing global hard seltzer portfolio. And we’re going to permanently streamline our smaller portfolio of legacy brands.”
Molson Coors discussed the portfolio cuts on the call, but the list of discontinued items was announced in an email. In a separate statement, the company also emphasized supply chain flexibility as a reason to shrink the portfolio, a topic that was also brought up on the call.
Among the brands on a growth trajectory are Vizzy hard seltzer, Topo Chico Hard Seltzer, which is distributed in partnership with Coca-Cola Co.
and Zoa, an energy drink created with Dwayne “The Rock” Johnson, that Hattersley says has benefited from the superstar’s social media presence.
Molson Coors reported second-quarter earnings that beat expectations and the highest sales growth in a decade.
Meanwhile, rival Truly hard seltzer parent Boston Beer Co.
saw its shares nosedive after its most recent earnings miss, with the company admitting that it “overestimated” growth of the category.
Molson Coors said it doubled its U.S. share of the hard seltzer market during the quarter, amid new Vizzy products showing results, strong Topo Chico Hard Seltzer demand and solid performance in Canada.
Read: Boston Beer stock suffers record selloff as analysts slash targets after big earnings miss
Bud Light is also upbeat about the seltzer business. Andy Goeler, vice president of marketing for Bud Light, told MarketWatch that the brand will launch a number of new products in the coming months in order to take Bud Light Seltzer into the holiday season.
Also: Budweiser maker stumbles, while broader European stock markets rise.
“As I look at every demographic segment, it’s growing among every age and ethnicity,” he said.
MKM Partners is not only bullish about Molson Coors’ prospects in seltzer, but for other parts of the business, including Miller Lite, Coors Light and Blue Moon Light Sky.
“COVID-19 disruption has concealed the improvements Molson Coors has made but, over time, we believe the improvements should become more obvious,” analysts said.
MKM rates Molson stock buy with a $64 price target.
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JPMorgan analysts aren’t as excited.
“While we commend Molson Coors’ efforts to reposition/premiumize the portfolio, we would need to see more sustained evidence of its ability to grow the top- and bottom-line in a normalized environment before becoming more constructive on shares,” analysts said.
JPMorgan rates Molson Coors stock underweight with a $48 price target.
Molson Coors stock has gained 8.6% for the year to date while the benchmark S&P 500 index
is up 16.8% for the period.