Leadership changes. Ad agency roster changes. There’s been a lot going on at MillerCoors in recent weeks. We caught up with MillerCoors CEO Gavin Hattersley this week to get further context on earnings and recent events, as well as what to expect for the rest of this summer and beyond.
Q: Earlier this week Molson Coors reported that MillerCoors posted volume and profit declines during the second quarter. How would you characterize these results?
A: It goes without saying we have had a tough first half of the year. We’ve faced significant industry challenges, some issues beyond our control and frankly some that were self-inflicted. We recognize that we need to move quickly and decisively to address these challenges. And we are.
Q: How so?
A: Well, one of our self-inflicted issues has been the rollout of a new integrated system platform at our brewery in Golden, Colo. We had challenges with the rollout, and as a result we had problems supplying many of our distributors with the brands and packs they needed. While I wouldn’t say we are at 100 percent, we are in a much better place now. We’ve tapped Bob McCann, a veteran leader who knows our network and our supply chain very well, to oversee the introduction of the system at our other breweries. With Bob in this role, reporting directly to me, we will have the right focus at the right level to ensure future transitions go smoothly.
We are also searching for a new CMO. This will bring a fresh perspective to our marketing and our portfolio, including an urgent focus on accelerating growth in the above premium segment and turning around Coors Light.
Q: What’s the status of Coors Light?
A: We refreshed our Climb On campaign earlier this year, but frankly, Coors Light continues to show softness. And there are a variety of factors at work; it’s not just about advertising. We’ve pulled together a cross-functional sales and marketing team to identify what’s working and what’s not and where we have opportunities. Turning around Coors Light is our most critical priority as a company right now and the entire leadership and the CMO we’ll be appointing will be doing what we need to do to ensure we get it fixed.
Q: You named a new agency for Blue Moon.
A: Yes. Winning in the above premium segment is one of our priorities, and accelerating Blue Moon is a critical part of that. Fifty5Zero is a newly created unit within DDB, the same parent company that’s helped lead the charge for Miller Lite. They have a track record of producing clearly differentiated, compelling work that will further elevate and grow Blue Moon.
Q: In 2015 you laid out a goal of getting to flat in 2018 and to growth in 2019. Where does that stand now?
A: When we set that goal, most forecasts saw relatively flat performance for the beer industry. Instead it’s been significantly worse, declining more than anyone predicted. I believe we can and ultimately will get our business to growth. But it will take more time. So barring a miracle, no, flat in 2018 is not going to happen and we are not planning to get to growth in 2019. That said, we are planning to improve our trajectory in 2019 and get on the path we need to be on.
Q: What makes you confident MillerCoors can do that?
A: We’re confident because of our team, our distributors, and because — while we have our challenges — there are plenty of bright spots. Miller Lite continues to take share in premium lights and hold share in the category. Sol, Arnold Palmer Spiked and Crispin Rosé all have plenty of runway. We’re performing better in economy than we were.
We’re confident because for two of the past three years we’ve ranked No. 1 in the Tamarron survey. We came in third this year, which is not surprising given some of the issues we’ve faced. We achieved a top three ranking in seven of 13 functional areas and received high marks in areas like field sales, selling tools, ad features and three-tier advocacy. We’re proud that we ranked No. 1 in trade/retail marketing and continued to lead the way in national accounts.
And retailers not only ranked us as No. 1 in total alcohol beverage in the latest survey by Advantage Group, they ranked us No. 2 in all of CPG, behind only Procter & Gamble. And earlier this year we came in first in CM Profit Group’s survey of on-premise accounts, after years of coming in second.
In other words, we’re confident because we have a lot to build on.
But we know we also have work to do and we are going to act decisively to get back on track. We will have more news to share in the weeks ahead, including some things we’re excited about in our innovation pipeline. We are not standing pat, I can assure you of that, and I’m excited about the opportunity ahead of us.