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05/20/2012

Moving Pieces at MillerCoors; Profits & People; Solid Q1 $$; Slow Q2 Start

While MillerCoors underperformed industry volume-wise in Q1, financially, MC had good qtr with strong rev/bbl and operating income per bbl gains, +3.9% and +17% respectively. Rev per bbl increase was full pt higher than any of previous 8 qtrs. About 70 basis pts of rev/bbl pop from brand mix, cfo Gavin Hattersley said on conference call. CEO Tom Long said there's "room to richen" brand mix going forward via growth of Tenth & Blake brands and focus on premium lights. Even while MC down 1.6% overall, Blue Moon up 15% and Leinenkugel brands up 25%. But pricing issues could affect future rev per bbl(see above).

Big personnel changes, internally and externally. CFO Gavin is moving over to take cfo spot at Molson Coors. Gavin widely viewed as 1 of MC's most capable execs. Coming in: Tracy Joubert, who started with SAB Ltd, most recently was finance, planning and analysis veep. MC also made big agency changes recently. Dropped longtime agency DraftFCB, which had been on Coors Light for decades. MC moved Coors Light and Banquet creative/digital work to new "integrated, multi-agency" group at WPP, after moving all Lite work to Saatchi. MC's media planning/and digital buying moved as well.

Too early to read impact of "Miller Time," cmo Andy England said on May 8 conference call, tho consumers responded "very positively" to tests. Then too, sales prexy Ed pointed to positive measure of distrib enthusiasm for new programs shown at sales mtg in late Mar. Over 81% of MC distribs said they planned to invest more behind MC brands, more than 10 pts higher than previous yr.
Asked about MC's relative underperformance vs AB in Q1, prexy Tom Long pointed out AB intro'd Bud Light Platinum in Q1 ("very limited" impact on MC, said Andy), that MC innovations focused in Q2 and Q3. Also, MC marketing spend in "back half" will be higher, Gavin said.

Asked about efforts to win back shelf space for premium lights at retail, Tom said on call that "dialogue is really starting," message has been "well received" and MC expects to "get more space or more balanced space" for retailers who "overegged" craft. So far, MC's Q2 numbers haven't improved. MC STRs down low single-digits for 1st 4 wks in Apr. Tom noted Apr colder, damper weather and fuel prices rose. In current economy, "retail situation is sputtering between progress" including "spectacular" March, and "sluggishness." For 4 wks thru May 5, MC off 5.9% in supers in Nielsen data. Each of MC's top brands down this period: Coors Light -1.9%, Lite -7%, High Life -8.8%, Key Light -5.8%; even Blue Moon -3.8%. Top AB brands no better in this period, by the way.

Publishing Info

  • Year: 2012
  • Volume: 43
  • Issue #: 10
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