Molson Coors Brewing Company reported results for the 2019 third quarter and is also announcing a new revitalization plan intended to achieve consistent top-line growth by improving efficiency and unlocking resources to reinvest in the business. The strategy, as detailed below, will be further discussed on the quarterly earnings call by new Molson Coors president and chief executive officer, Gavin Hattersley, including information on reinvestment plans, organizational structure, and impact on guidance.
The plan aims to revitalize Molson Coors, achieving consistent top-line growth by enabling the company to: 1) Invest in iconic brands as well as opportunities to grow in the above premium space, 2) Expand beyond beer without having to sacrifice support for larger brands in the company’s portfolio and 3) Create new digital competencies for commercial functions, system capabilities for supply chain and capabilities for employees. To make this possible, Molson Coors plans to unlock significant resources by eliminating duplication, shedding what’s not working and restructuring the organization to better succeed in today’s competitive, fast-paced environment.”
Revitalization plan
This revitalization plan is designed to allow Molson Coors to invest across its portfolio at the level necessary to drive long-term, sustainable success.
Investing in the core, growing above premium and expanding beyond beer
Molson Coors has shown it can improve the performance of its iconic brands and can stabilize brand performance and position for sustainable growth – by accelerating investments behind the largest brands in its portfolio, by focusing on recruitment especially of new legal age drinking consumers, by driving relevance with breakthrough marketing, and by innovating on core brands to attract legal age drinkers. The company will invest significantly in Above Premium, the fastest growing area of the beer industry, with added investment in existing brands, new innovations and possibly through bolt-on acquisitions where there is a strong business case. After launching two portfolio firsts in 2019, a canned wine and a hard coffee, Molson Coors will continue to invest more in whitespace opportunities and in growth spaces beyond the beer category.
The company will also put a greater focus on bringing new beverages to market faster and with more precision. This includes expanding the model that has reduced the time it takes to bring innovations to market from 18 months to as little as four months in the US and expanding a “test and learn” approach that evaluates market potential for products and then quickly scales up.
Investing in capabilities, systems and people
As part of the revitalization plan, the company will also invest in improving its digital capabilities, expanding data resources and building out innovation systems. This will better enable precision marketing and improve e-commerce abilities. New investments in leadership and growth opportunities for employees will help build an inclusive culture and diverse workforce.
Separately, Molson Coors will continue its ongoing efforts to modernize its brewery footprint and will also invest several hundred million dollars to modernize its brewery in Golden, Colo. These plans will allow for more flexible capacity to better meet demand and fulfill future growth opportunities, while increasing supply chain efficiency. The company is not using the cost savings generated from the revitalization plan to make this previously planned brewery investment possible.
Streamlining to enable growth
To make the new investments possible, Molson Coors plans to unlock approximately $150 million in savings by simplifying its structure. The company will move from a corporate center and four business units (MillerCoors in the US, Molson Coors Canada, Molson Coors Europe and Molson Coors International) to two streamlined business units – North America and Europe.
The North America business unit will consolidate the United States, Canada and corporate center, enabling the company to move much more quickly with an integrated portfolio strategy. The Europe business unit will be structured to allow for standalone operations, developed and supported by a European-based team, including a local leadership, commercial, supply chain and support functions. The existing Molson Coors International team will be reconstituted to more effectively grow the company’s global brands – with the Latin America business reporting into the North America business unit and Africa and Asia Pacific reporting into the European business unit. The change in structure to two business units will not be effective until January 2020 and therefore the resulting financial reporting changes will not be reflected until our first quarter of 2020 results.
Reduced office footprint
To further drive efficiency and enable growth, Molson Coors is consolidating and reorganizing office locations. The Denver office will be closed and Chicago will be designated as the North American operational headquarters. Functional support roles currently housed in several offices around the country will now be based in Milwaukee, Wisconsin.
As a result, we expect to reduce employment levels by approximately 400 to 500 employees as part of this restructuring, primarily in our existing United States, Canada and International reporting segments, as well as Corporate.
In connection with these consolidation activities and related organizational and personnel changes, which were determined and initiated on October 28, 2019, the company currently expects to incur certain cash and non-cash restructuring charges related to employee relocation, severance, retention and transition costs, non-cash asset related costs, lease exit costs in connection with office leases in Denver, Colorado, and other transition activities estimated in the range of approximately $120 million to $180 million in the aggregate, the majority of which will be cash charges that will be spread through the balance of this fiscal year and fiscal years 2020 and 2021. The consolidation activities are expected to be substantially completed by the end of fiscal year 2021. Costs related to these restructuring activities are expected to be recorded as special items within our financial results beginning in the fourth quarter of 2019.
New senior leadership
The company will also consolidate the Global, MillerCoors, Canadian, and MCI leadership teams into one team to streamline decision making. Hattersley’s new Leadership Team will assume their roles effective November 1.
Adam Collins, Chief Communications and Corporate Affairs Officer
Simon Cox, President and CEO of Molson Coors Europe
Kevin Doyle, President of US Sales
Brian Erhardt, Chief Supply Chain Officer
Rahul Goyal, Chief Strategy Officer
Tracey Joubert, Chief Financial Officer
Fred Landtmeters, President of Canada
Pete Marino, President of Emerging Growth
Dave Osswald, Chief People and Diversity Officer
Lee Reichert, Chief Legal and Government Affairs Officer
Michelle St. Jacques, Chief Marketing Officer
As Molson Coors moves to a North America and Europe structure, there will no longer be a President of the US business.
Changing Company Name to Molson Coors Beverage Company
The company will also change its name to Molson Coors Beverage Company to better reflect its strategic intent to expand beyond beer and into other growth adjacencies. The company will legally change its name starting in January 2020.
Molson Coors Announces Revitalization Plan
The revitalization plan is designed to allow Molson Coors to invest across its portfolio at a level necessary to drive long-term, sustainable success
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