While craft breweries around the country release their annual Oktoberfest seasonals, MillerCoors has slightly different news this fall: 200 salaried employees will be asked to see themselves out, and 150 more open positions will be eliminated by the end of October. Gavin Hattersley, MillerCoors CEO, cited “financial flexibility” as a reason for the cuts, along with the need to “quickly capitalize on new opportunities,” Brewbound reports.
By new opportunities, he means sell more Coors Light. While it lets go of hundreds of employees, MillerCoors is still on the hunt for a chief marketing officer. That person’s top priority? “Turning around Coors Light,” Brewbound reports.
You think you know a guy! Or, rather, you think you have job security working for one of the biggest brewing corporations in the world! Not the case, apparently.
Sales at Molson Coors, MillerCoors’ parent, have been steadily declining. The company reported a 2 percent decline in net sales and 3 percent decline in revenue in second-quarter earnings last month. A week later, MillerCoors announced it would be tossing Two Hats, its millennial-targeted fruity light beer, out the window.
Oh, and MillerCoors is now also asking visitors to shell out $10 for its once-free brewery tours.
Long story short? MillerCoors is strapped for cash. It’s not alone. In a strikingly similar situation, Anheuser-Busch InBev also eliminated more than 350 employees last year. Most of them worked in ABI’s craft-focused High End division. ABI’s goal? To focus on low-alcohol beverages like Bud Light Orange.
Big Beer is a two-headed beast. Breweries like MillerCoors and ABI innovate, but they do so to capture our dollars, not to improve our lives or their industry with more interesting beverages. If a product doesn’t deliver, it goes (see ya, Two Hats). If it sells, resources funnel toward it (why, Bud Light Orange, why?). If 350 employees are too expensive, they go, too.
Mass layoffs like these are tough on any industry. As a journalist, I’m constantly bemoaning how publications I admire have to suddenly slash their staff writers (looking at you, Condé Nast Traveler) as they struggle to make ends meet in a rapidly changing industry.
In this era of seemingly constant corporate “restructuring,” it’s worth taking a minute to consider the endgame of the industry’s top players, whether they are a publishing conglomerate or brewing powerhouse. For big brewers like Molson Coors and ABI, a profitable bottom line isn’t part of the overall endeavor. It is the goal itself.
Flavored Malt Beverages Sizzle as Beer Sales Fizzle
According to market research firm IRI Worldwide, flavored malt beverages (FMBs) produced by craft companies jumped 242 percent over the last year. This category includes the (non-craft) likes of Smirnoff Ice, Mike’s Hard Lemonade, and ABI’s “Ritas” (Lime-A-Rita, Straw-Ber-Rita, Mang-O-Rita, etc.).
Year-to-date volume sales of beer, meanwhile, are “basically flat,” Brewbound reports. While sales at top breweries like New Belgium, North American Brewing, and Deschutes either declined or remained stagnant year-over-year, Boston Beer is earning a profit. Why? In addition to Samuel Adams, Boston Beer makes Twisted Tea and Truly Spiked & Sparkling — two FMBs.
As VinePair reported last week, spiked sparkling beverages are rising to the top of shopping carts. Sales of hard seltzers spiked 177 percent between July 2017 and July 2018. Lagunitas, owned by Heineken, dropped Hi-Fi Hops, a THC-infused hoppy sparkling water in July. In March, Corona introduced Refresca, its “premium spiked refresher.” And we all remember the hard soda boom of 2016 (shudder).
I personally find FMBs gross, but their success makes sense: Americans are moving away from sweet, caloric sodas and soft drinks and seeking lower-cal liquids to get buzzed on.
All brewers can really do, aside from launch spiked seltzers of their own, is answer consumers’ calls for less caloric brews. Lower ABV means lower amounts of sugar, and I’m all for both.
Founders Takes On the King of Beers
Solid Gold is poised to dethrone the King of Beers, and Founders couldn’t be happier about it (obviously). “Solid Gold is our first move towards taking our craft circle and going outside of it,” Founders co-founder and CEO Mike Stevens told Brewbound. “Once we start looking at the bigger picture, we can take this whole thing to another level.” What he means is, by brewing a premium lager, Founders is competing with macro brands like Bud, Miller, and Coors. He thinks other craft brewers should do this, too.
It’s certainly working for Founders. The company reported year-to-date growth in basically every category, from beer production (34 percent) to off-premise dollar sales (40 percent) to sales of its most successful brand, All Day IPA (38 percent). It will start distributing to its 47th state, Colorado, next month.
The thing is, Founders isn’t alone out there, fighting with the macro brands for consumer dollars. Many breweries are doing this. And it’s easier said than done. Founders, having sold a 30 percent stake to Spanish brewer Mahou San Miguel in 2014, has the luxury of taking risks as well as scaling up production (and marketing, for that matter). Truly small producers are not as inclined to invest the time or money for equipment necessary to make lagers, barrel-aged beers, or other products outside craft beer’s “tiny bubble,” as Stevens describes it.
But Stevens does have a point. Sometimes, more is more. If more brewers attempt to beat Big Beer at its own game — pale lagers — ultimately, consumers will spread their dollars among more brands. The hope for craft brewers is that these consumers will then make it rain across lots of new beer styles, new breweries, and, maybe someday, their own mug club membership. More choice is a good thing for consumers, but for brewers, it’s a hard decision.