Molson Coors Brewing Co. is speeding up efforts to be less of a beer company.
The maker of Molson Canadian and Coors Light announced on Wednesday it is moving forward with a “revitalization plan” in which it will cut 400 to 500 white-collar jobs and regroup its commercial headquarters for North America in Chicago. It will also change its name to Molson Coors Beverage Co. to better reflect its strategic push to expand beyond beer into other offerings.
Molson Coors officials said the company will close its office in Denver, while its Montreal office will stay open. The two cities currently serve as Molson Coors headquarters after a merger between the brewers concluded in 2005, and are the symbolic hearts of the company.
Brewing operations in Canada will remain unchanged, company spokesman François Lefebvre said. The office in Toronto will also remain open, he said.
The moves are part of a wider effort by Molson Coors to broaden its product line and reinvent itself as beer sales fall. That effort is more urgent than ever now, said chief executive officer Gavin Hattersley, who took command of the brewer last month from the retired Mark Hunter.
“Our business is at an inflection point,” Mr. Hattersley told investors and analysts on a conference call on Wednesday. “We can continue down the path we’ve been on for several years or we can make the significant and difficult changes necessary to get back on track.”
Brewers are struggling with tepid demand for beer in both the United States and Canada as consumers make other choices or reduce their alcohol consumption outright. Beer sales volumes fell 1.5 per cent last year south of the border compared with the previous year, according to drinks market analysis firm IWSR. In Canada, the market contracted by 0.3 per cent over the same time, hurt by declining sales of imported beers, according to trade group Beer Canada.
Molson Coors has posted sales declines in six of the past seven quarters. Faced with declining prospects for its traditional brands, the company is looking to other products to reverse the trend.
The company has already bought a California kombucha manufacturer, invested in a chai tea company and launched a joint venture with Quebec-based cannabis producer Hexo Corp. to develop cannabis-infused beverages. It also launched lines of canned wine and hard coffee. On Wednesday, the company said it aims to ramp up investment in “above-premium” beers, a fast-growing category that includes craft beers.
Demand for traditional beer has been slowing globally, not just in North America. Last week, the world’s largest brewer, Anheuser-Busch InBev, reduced its annual profit-growth forecast as drinkers in Brazil and South Korea turned away from its beers.
Molson Coors, which had about 18,000 employees at the end of 2018, plans to save about US$150-million in costs with the reorganization. The revamp will also see it consolidate its business units to one each in North America and Europe from four globally.
Company officials said Molson Coors will also maintain what they called “executive offices” in Montreal and Denver as laid out under the company’s bylaws. Mr. Lefebvre said annual shareholder meetings will continue to rotate between the two locations. Company chairman Andrew Molson is based in Montreal, as are Geoff Molson and Louis Vachon, who are also on the brewer’s board.
The brewer said it would incur charges between US$120-million and US$180-million to make the changes, which will be spread out through the rest of the financial year and until fiscal 2021.
“Organizational changes, further cost-cutting are appropriate, though the magnitude of cost [savings] is likely to underwhelm,” Jefferies analyst Kevin Grundy said.
With a report from Reuters