Pricing, Cost Savings Help Molson Coors Amid Challenges

We think narrow-moat

Weak demand in the U.S., which accounts for roughly two thirds of sales, continued to weigh on results, with domestic sales-to-wholesalers volume declining 3.6%, driven by declines in the premium light segment, which includes core brands Coors Light and Miller Lite. However, we largely attribute this performance to industrywide challenges rather than a material shift in the company's competitive positioning, as evidenced by the mid-single-digit volume decline wide-moat AB InBev experienced in the U.S. in its second quarter. In this vein, we estimate domestic beer volumes contracted by 1% in 2017 and that beer's share relative to wine and spirits (based on supplier gross revenue) fell to 46% versus 50% a decade prior.

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