Sales of Coors Light are climbing, the merger of Adolph Coors and Molson has produced savings, and Molson Coors turned in a strong earnings report.
But some analysts remain concerned that competition, particularly in Canada, could smother growth.
Denver-based Molson Coors on Tuesday announced a 25.5 percent increase in profit for the third quarter compared with the same period last year. That bumped shares up 5 percent to $71.18 on Tuesday, and shares jumped another 71 cents Wednesday.
In the U.S., Molson Coors reported sales by volume increased 3 percent, driven largely by increased sales of Coors Light and Keystone Light.
The increases come at a time when other big American brewers’ sales are flagging.
“Coors Light has really got some momentum in a marketplace where mainstream domestic beer is not doing well. They’re really the only big American beer company that shows momentum right now,” Harry Schumacher, editor of Beer Business Daily, said Wednesday.
He credited the increase to a strong marketing campaign, specially lined stay-cool cans and other packaging used to promote the brand, and a program to increase distribution through supermarket chains.
“This was a solid quarter. In a tough environment, they have stabilized and turned the business in the U.S.,” said Patrick Schumann, an analyst with Edward Jones.
But the brewer has suffered in Canada, where discount brands are chipping away at its market share, Schumann said. In Canada, sales volume fell 2.5 percent because growth in Coors Light, Rickard’s and partner import brands was offset by a decline in other brands that stemmed from competitive pricing and other conditions.
Molson Coors said sales volume also fell 4.4 percent in Great Britain.
Leo Kiely, president and chief executive, told analysts during a conference call that the company expects to achieve the $175 million of cost savings promised when Coors and Molson merged.
Kiely said the firm hopes to begin seeing some more benefits from cost-cutting initiatives, including $6 million to $7 million of savings related to the closing of a Memphis, Tenn., brewery.
But the cost savings that are helping to boost the bottom line can’t be counted on over the long term, Schumann said.
Bear Stearns analyst Carlos Laboy called the company’s earnings “a treat on Hallo ween,” in a research note. But Laboy questioned the company’s reliance on cost savings to boost its bottom line.
“We await the time when Molson Coors can get the benefit from internal cost efforts and greater consumer pull of its brands. Furthermore, we are always suspect of beverage companies looking to save their way to prosperity with a flat or declining top line.”
The Associated Press contributed to this report.
Staff writer Tom McGhee can be reached at 303-954-1671 or tmcghee@denverpost.com.
