Carling owner Molson Coors praises marketing’s role in business turnaround

The Molson Coors Beverage Company plans to further increase its overall marketing investment this year, having reported “tremendous progress” against its “revitalisation plan”.

In its full year fiscal results for 2021, the business behind beer and alcohol brands including Carling, Coors, Foster’s, Peroni and Rekorderlig Cider recorded top line revenue growth for the first time in a decade.

Net sales increased 6.5% on a reported basis to £10.3bn, which the company attributed to positive net pricing and portfolio premiumisation, as well as higher marketing spend over the year.

Despite a “turbulent” year of pandemic uncertainty, supply chain disruption and cost inflation, Molson Coors chose not to cut marketing. Speaking on a call with investors this week, CEO Gavin Hattersley said marketing “will help ensure the long-term health of our brands and our business”.

Marketing, general and administrative (MG&A) expenses increased 4.8% on a reported basis over the year, primarily due to higher marketing spend to support new innovations and core brands, the business said.

We chose not to pull the marketing lever, because our brands are reacting so well to the marketing and we wanted to set ourselves up for a strong 2022.

Gavin Hattersley, Molson Coors

For the year ending 31 December, MG&A expenses totalled $2.6bn (£1.9bn). In the fourth quarter alone, MG&A rose 2.6% to $665m (£496m).

“We increased marketing investments in the quarter to levels above the fourth quarters in both 2020 and 2019, providing strong commercial support behind our brands as of 2022,” Hattersley explained.

“We increased marketing behind our core brands and key innovations,and we’ve become much more effective with those dollars as we accelerated our digital marketing capabilities.”

Hattersley added the business has “laid the foundation” for sustainable, long-term top and bottom line growth.

In the fourth quarter, underlying EBITDA increased 21.9%, with the business crediting marketing’s role in this growth. However, EBITDA dropped 3.5% over the year, as increased MG&A spend coincided with cost inflation and lower financial volumes.

Nevertheless, Hattersley promised the business would “continue to put money into marketing”.

“We were very choiceful in December once we realised that Omicron was going to impact us. We chose not to pull the marketing lever, because our brands are reacting so well to the marketing and we wanted to set ourselves up for a strong 2022,” he said.

Plans for 2022

The Molson Coors Beverage Company has said it expects to increase marketing investment even further this year, as the business continues to invest behind its brands and innovations.

Given the pandemic restrictions in place during the first half of 2021, when many bars and restaurants were closed, the first half of this year is expected to see a particularly high year-on-year rise in spend.

Chief financial officer Tracey Joubert said: “Marketing will be higher in the first half of the year as we cycle some of the on-premise shutdowns and things like that. We are expecting our full year marketing in 2022 to be higher than 2021, but really more so in the first half.”

The business is anticipating a mid single-digit increase in net sales this year compared to 2021 on a constant currency basis and a high single-digit increase in underlying income before tax.

We’ve become much more effective with those [marketing] dollars as we accelerated our digital marketing capabilities.

Gavin Hattersley, Molson Coors

The beer and alcohol company first unveiled its revitalisation plan in October 2019, after recording a 3.2% decline in net sales in the third quarter. The strategy aims to achieve consistent top-line growth by improving efficiency and unlocking resources to reinvest in the business.

The plan has three strategic pillars: investing in the business’s “iconic brands” and opportunities to grow in the “above premium” space; expanding “beyond beer” without sacrificing support for larger brands in the portfolio; and developing new digital competencies.

“Our business is at an inflection point. We can continue down the path we’ve been on for several years now, or we can make the significant and difficult changes necessary to get back on the right track,” Hattersley said at the time.

“Our revitalisation plan is designed to streamline the company, move faster, and free up resources to invest in our brands and our capabilities. Through it, we will create a brighter future for Molson Coors.”

Hattersley added the business did not expect to see the economy beer segment grow in the future.Pernod Ricard ups marketing spend despite ‘volatile’ environment

“Today, our top line is growing fast for the first time in 10 years,” Hattersley said this week.

“Our core brands are growing net sales revenue for the first time in years. Our portfolio is premiumising to levels never before achieved. We are moving to scale beyond beer and are busy making tangible progress towards achieving the goals of our revitalisation plan. We are set up for a strong 2022.”

‘Above premium’ net sales revenue grew 15% over 2021, with growth in US hard seltzers the “biggest driver”.

Molson Coors began an exclusive partnership with The Coca-Cola Company to develop its Topo Chico Hard Seltzer in 2020. After a “successful” first year, the partnership was expanded last month, with Molson Coors poised to develop and commercialise a brand of alcoholic beverages under juice brand Simply.