Molson Coors Brewing Co. beer bottle
Tiffany Hagler Gerd | Bloomberg | Getty Images
Molson Kors Drink It is seeing a split develop among its customers as inflation hits their wallets: some beer drinkers are trading lower, while others are still heading towards an expensive six-pack.
Shares of the beverage company fell more than 10% in morning trading on Tuesday as concerns about an uncertain macroeconomic environment weighed on the stock. The company reported second-quarter earnings and revenue roughly in line with Wall Street estimates.
CEO Gavin Hattersley told CNBC that the beer industry saw a drop in sales during the second quarter, which the company blamed for a 1.7% drop in US sales.
But Molson Coors said it outperformed the broader industry in the United States, Canada and the United Kingdom during this period. Hattersley credited strong sales growth for more expensive brews like Blue Moon and Peroni Beer, as well as boosting demand for cheaper beers like Miller High Life and Keystone Light.
A year ago, Molson Coors began shrinking its portfolio of lower-priced beers to focus on more popular options. Some investors wanted the company to forgo the sector entirely and instead focus entirely on more expensive beers, which have done better in recent years.
“What was considered by some to be our Achilles’ heel, in the past, has set us perfectly in the present,” Hattersley said. “Some of our competitors are only operating in the premium space, which is clearly not a place I would like to be in because we are heading into what will obviously be tough times.”
As the Molson Coors six-pack becomes more expensive, more consumers can switch to its lower priced options. The company raised its prices in the spring by nearly twice their usual rate and is considering another round of increases at the end of 2022, according to Hattersley.
Beer isn’t the only industry with a split in consumer behavior. Ferrari Reported a record in the second quarter on Tuesday, driven by the high growth of its luxury cars. Delta Airlines He said that refunds for premium class tickets exceeded the refund rate for main cabin tickets. Chipotle Mexican Grill He said high-income clients visit frequently, while those who earn less than $75,000 a year don’t order their burritos as often.