Molson Coors to increase advertising to spur growth

Coors Light brand to benefit from bigger ad budget with new packaging and TV ads

Canadian hockey fans aren’t the only ones disappointed that the country’s teams didn’t go deeper in the NHL playoffs.

Molson Coors said it didn’t see any meaningful boost in sales from the latest post-season even though four Canadian teams made it past the regular season.

“What would be helpful is if we had more Canadian teams going further, then we would start to see it,” Molson Coors Canada president Stewart Glendinning said Thursday after the company released its second-quarter results.

The Montreal Canadiens and Calgary Flames were defeated in the second round after besting the Ottawa Senators and Vancouver Canucks, respectively.

Glendinning declined to say if the company supported the NHL adding a franchise in Quebec City — Quebecor recently said it wanted to bring pro hockey back to the city. But he said hockey and beer drinking go hand in hand.

Molson Coors said it planned to aggressively step up its advertising for the rest of this year as it looks to reverse market share losses and spur volume growth in its two largest markets — Canada and the United States.

Much of the unspecified additional spending will be targeted on Coors Light, which is getting new packaging and will be supported by new TV ads, the company said.

Molson Coors CEO Mark Hunter warned analysts during a conference call that the investments, along with the low Canadian dollar, would hurt results for the remainder of the year. However, he said efforts to add new products and support its brands would boost revenues and profits in the longer term.

During the second quarter, Molson Coors beat analyst expectations even though its net profit dropped 21% to US$229.3 million on lower revenues and the negative impact of a higher U.S. dollar.

Underlying after-tax profits decreased 9.9% to $263.8 million from $292.7 million.

Molson Coors took a $22.4-million hit largely due to the lower value of the Canadian dollar and euro. It expects to lose in excess of $70 million this year as a result of the falling loonie, with another $40 million to come from contract losses in Canada and Britain.

Revenues were about $1 billion, off from $1.189 billion a year earlier.

In Canada, Molson Coors market share dipped 1.5 percentage points as sales volume decreased 6.6%. Part of the market share decline flowed from weaker sales in Ontario, Quebec and the Atlantic provinces as well as its decision to raise prices.

Glendinning also said the company expected to complete a feasibility study by the end of the year to determine whether to update its old brewery in Montreal or build a new operation.

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