Major beer companies are shifting their focus towards premium craft beers and non-alcoholic options to adapt to changing consumer preferences and rising inflation rates.
In their recent earnings calls, Molson Coors and Heineken both revealed their plans to emphasize premium brands as the overall beer category experiences a decline. According to a report by TD Cowen, industry-wide sales decreased by 2.9% in the last year, with domestic beer seeing a 4.2% drop year over year.
Gavin Hattersley, CEO of Molson Coors, mentioned that the company divested four underperforming craft brands last year to allocate more resources to its popular premium brews like Blue Moon.
Despite a 3% decrease in volumes and a 1.9% decline in net sales revenue, Molson Coors expects a sales boost in the next quarter following a planned 1% to 2% price increase. Coors Banquet, which has gained popularity thanks to TV shows like “Yellowstone,” saw a 16% increase in volume growth in the last quarter.
While Molson Coors is optimistic about its premiumization strategy, analysts predict that the benefits may take longer than expected to materialize.
Heineken, facing similar challenges in the beer market, is also exploring opportunities beyond traditional offerings. The company highlighted the success of its premium brews and non-alcoholic options, with Heineken 0.0 outpacing standard Heineken sales.
Operating profits for Heineken increased by 8.3% in 2024, despite a 1.8% decline in net revenue. CEO Dolf van den Brink expressed confidence in the company’s investments in brewery optimization and digital technology to navigate industry challenges.
Heineken’s focus on expanding its premium offerings in the Americas has shown positive results, with a 6% increase from 2021 to 2024. This strategy is expected to drive market share growth for the company.
Analysts at Bank of America viewed Heineken’s strategic direction positively, following recent disappointments in financial results.