The Molson Coors Beverage Company (NYSE: TAP) is expected to report Q1 earnings Thursday morning. Zacks Investment Research forecasts the brewer’s consensus Earnings Per Share (EPS) for the quarter will be $-0.12.
If the forecast proves accurate, the company’s EPS drops from last year’s reported $0.35, a -134.3% year-over-year change. Revenues are expected to suffer a 11.4% decline from last year’s reported Q1, forecasting at $1.86 billion. It is worth noting, however, that Molson Coors has beaten consensus Earnings Per Share estimates in three of the four previous quarters.
The Hard Seltzer Effect
Molson Coors investors will be watching hard seltzer closely. During last year’s Q3 earnings call Gavin Hattersley, President and Chief Executive Officer of Molson Coors, stated by “the end of 2021, we plan to capture a double-digit share of the U.S. seltzer market, backed by what arguably is the most complete seltzer portfolio in the business.”
In early 2020 the company controlled less than 2% of the hard seltzer market but they managed to capture 4% of the market by the end of the year.
The hard seltzer market hit nearly $3.8 billion this past year and estimates put it at $11 billion by 2027. With the pandemic and quarantine regulations causing a decline in on-premise beer sales, many major companies are relying on hard seltzer to make up for lost revenue.
For instance, Boston Beer (NYSE: SAM) reported declines in depletions in three of their five main brands including Angry Orchard, Dogfish Head and Samuel Adams. However, the company’s hard seltzer and ready-to-drink (RTD) categories performed impressively. Truly Hard Seltzer sales increased more than 147% and Twisted Tea sales increased 32%.
Molson Coors’ hard seltzer portfolio includes Coors Seltzer, Vizzy Hard Seltzer and, most recently, Proof Point, a ready-to drink canned cocktail line featuring real spirits, seltzer and fruit juice. In its first month on the market Coors Seltzer sold more than 500,000 cases. Vizzy Hard Seltzer made its way to #8 on the Nielsen top 10 growth brand list.
In January of 2020 the company officially changed its name from Molson Coors Brewing Company to Molson Coors Beverage Company signaling a change in focus from beer to a broader range of beverages, including hard seltzer. The company also recently invested millions of dollars into new equipment to boost its hard seltzer output by 400%.
Topo Chico Agreement
In another promising move, Molson Coors recently struck a distribution deal with The Coca-Cola Company (NYSE: KO) to produce, market and distribute Coke’s only alcoholic beverage, Topo Chico Hard Seltzer. Topo Chico Hard Seltzer launched in the US last month after positive responses in Latin America and Europe.
In March, Hattersley announced the company is in the process of developing another alcoholic beverage for Coke, Topo Chico Ranch Water.
Thursday’s call will shed some light on exactly how much hard seltzer has impacted Molson Coors’ Q1 numbers. However, given the company’s commitment to hard seltzer and its investment in growth within the category, it is certain that all eyes will be on seltzer as the company navigates the post-pandemic market.
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