Molson Coors Brewing Co. has high hopes that its new sponsorship of the National Hockey League will drive Canadian sales and help offset the impact of a weakened economy.
“Hockey is something that is very central to Canadian culture and really helps us with Molson Canadian and the Coors Light brand,” Molson Coors Canada president Dave Perkins said Wednesday during a conference call.
The sales and marketing costs of the $375-million sponsorship deal are being absorbed in existing budgets and should not be onerous, he said. “It’s a very reasonable deal for us, it’s one that we feel will be an important part of building the health of our portfolio so we’re really excited about it.”
The impact of the deal, which was endorsed by an Ontario court’s rejection of a challenge by Labatt Breweries, hasn’t yet kicked in.
Molson Coors CEO Peter Swinburn said the agreement will provide “greater access to the market and drive relevance of our brands among this very important consumer group.”
Young men are a core market that has reduced its beer spending due to high unemployment, particularly in the United States.
The maker of Coors Light, Molson Canadian and Carling, which keeps its books in U.S. dollars, said it earned US$197.4 million in the latest quarter as it was hurt by a weak U.S. economy, higher costs and surprisingly weak sales in the U.K.
The results were down from $256.1 million earned in the same quarter last year.
Excluding one-time items related to a writedown of its Sparks brand and other costs, the company’s profits fell 11.2 % to $212.4 million.
Revenue rose 9% to $954.4 million. Analysts expected $942.4 million.
Molson Coors, based in Denver with its Canadian unit in Montreal, said it continues to face higher freight, fuel and packaging costs.
In Canada, which accounts for 44% of its total profits, underlying pre-tax income increased 0.2% to $162.3 million.
A 7% increase in the Canadian dollar provided an $8 million benefit. Without this help, profits fell 7% in local currency, but slightly better than a forecast of 9%, said Mark Swartzberg of Stifel Nicolaus and Co.
Higher prices, reduced marketing and administrative expenses and a stronger Canadian dollar were offset by cost inflation and the effect of asset-value and cost adjustments.
Retail sales in Canada decreased 0.6%, largely due to increased competitor price discounting in key regions, especially Quebec.
Molson Coors said its Canadian market share fell about a half share point from a year ago, when it grew by almost a full point following the Vancouver Winter Olympics.
The Canadian beer industry retail sales increased nearly 1% in the third quarter.
