Although beer consumption is up during the pandemic, Molson Coors (NYSE:TAP) announced it was furloughing some employees and suspending its dividend for the rest of 2020 to save money.
The brewer, which recently shifted its focus away from beer and toward a broader range of beverages, also said it will cut its capital expenditures by $200 million, reduce marketing expenses, limit the number of new hires it makes, and also explore bailout programs that might be available from European governments.
Confronting changing tastes
Beer sales have surged during the pandemic, according to Nielsen tracking that shows dollar sales in off-premise retailers such as packaged goods stores and grocery stores hit almost $984 million for the week ending May 9, the biggest week of sales week since the July 4 holiday week last year.
That coincides with data from industry analysts at Bump Williams Consulting, which saw a 33% jump in sales for the week of May 10, ahead of the average 24% gain seen during the COVID-19 pandemic.
Yet Molson Coors is apparently languishing, as it takes actions aimed at "protecting and bolstering the Company's liquidity position" during the crisis.
That's not unwise, though it seems a little late in the game, because restaurants and bars are now beginning to reopen, albeit with social distancing protocols in place. Anheuser-Busch InBev (NYSE:BUD) cut its dividend 50% in mid-April and Heineken (OTC:HEIN.Y) suspended its payout a week later. Conversely, Corona brewer Constellation Brands (NYSE:STZ) has maintained its dividend throughout the crisis.
Molson started the year with a new name, changing from Molson Coors Brewing Co. to Molson Coors Beverage Co., and is in the process of launching new drinks including hard seltzers and wine spritzers, with plans to release cannabis-based drinks in the future.