Amid a challenging beer market, major brewers Molson Coors and Heineken are pivoting toward premium and non-alcoholic options to stay competitive and respond to changing consumer preferences and inflationary pressures.
Both companies revealed their strategy during earnings calls last week, with a shared focus on premium brands to counter the overall decline in beer sales. According to a report by TD Cowen, beer sales across the industry dropped by 2.9% last year, with domestic beer sales falling 4.2%.
Molson Coors CEO Gavin Hattersley outlined the company’s shift, highlighting the divestment of four underperforming craft brands as part of a broader strategy to concentrate on top-performing premium offerings, such as Blue Moon. Hattersley noted that Molson Coors’ resources are now geared toward expanding its “above-premium” portfolio in both beer and non-beer categories. Despite a 3% decline in volumes for the quarter and a 1.9% drop in net sales revenue year-over-year, the company is optimistic that a planned price increase of 1% to 2% in 2025 will drive sales growth in the upcoming quarter.
One bright spot for Molson Coors has been Coors Banquet, which has gained significant popularity, especially among younger consumers, following its feature in TV shows like “Yellowstone.” The brand saw a 16% increase in volume during the last quarter. Despite challenges, the company remains confident that its premiumization strategy will yield results, although TD Cowen analyst Robert Moskow cautioned that the plan may take longer than expected to deliver meaningful benefits.
Similarly, Heineken is adapting to the industry’s struggles by expanding its premium and non-alcoholic offerings. The company highlighted the strong performance of its flagship non-alcoholic beer, Heineken 0.0, which is growing faster than its traditional beer. In 2024, Heineken’s operating profits rose by 8.3%, despite a 1.8% decline in net revenue.
Heineken CEO Dolf van den Brink emphasized the company’s investments in brewery optimization and digital technologies as key to navigating market challenges. He also pointed to the growing share of premium products in Heineken’s Americas portfolio, which has increased from 30% in 2021 to 36% in 2024. Van den Brink believes this focus on premiumization will allow the company to capture a larger market share in the coming years.
Bank of America analyst Andrea Pistacchi expressed confidence in Heineken’s strategy, noting that it was well-received by investors following some disappointing results in recent quarters.
As beer consumption continues to face headwinds, both Molson Coors and Heineken are betting on their premium and non-alcoholic products to maintain growth and appeal to evolving consumer tastes.
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