COVID-19 and the ensuing restrictions that governments put in place to control the disease's spread have affected Molson Coors' (NYSE:TAP) results. Even if authorities lift stay-at-home orders and allow people back into bars and restaurants, the recession means fewer people are going out because they have less discretionary income.

So, Molson Coors' revenue and profits aren't recession-proof, but that's not too troublesome. I'm far more concerned by other issues confronting the company that predate the pandemic, which make me cautious about investing in the shares.

A man wearing a mask and gloves holding a bottle in a food store.

Image source: Getty Images.

Less wining and dining

The company derived approximately one-quarter of its 2019 sales from outside the home, or what Molson Coors refers to as the on-premise channel. These are places like bars and restaurants.

Unsurprisingly given the pandemic, off-premise sales, consisting of retailers like liquor stores, grocery stores, and supermarkets, accounted for virtually all of its second-quarter sales. The disappearance of people drinking beer outside of their homes resulted in softer second-quarter sales, which fell by more than 14% when adjusted for foreign exchange translations.

Off-premise sales are the key to sustaining the company's performance during the downturn as people stay at home more. Statistically, people either maintain or increase their drinking when they hit tough economic times.

Unfortunately, this may not help Molson Coors get through these challenging days. The company has been concentrating on the above premium segment, which includes craft beers. While Gavin Hattersley, Molson Coors' CEO, stated on the second-quarter earnings call that people haven't traded down, I don't believe that will continue to occur as the recession goes on.

Molson Coors faces other challenges, too.

People turning to alternatives

Before the pandemic, Molson Coors and other beer makers were losing market share to other alcoholic drinks, notably hard seltzers (included in the beer category). Over the last five years, its slice of beer sales has dropped from 26% in 2016 to 23% last year. Certainly, Molson Coors wasn't the only one affected. Leader Anheuser-Busch InBev also saw its share fall from 45% to 42%.

These are long-standing trends, and consumer tastes don't change that quickly. To its credit, Molson Coors has entered the field with its own offerings, including Vizzy, which it launched in April, and Coors Seltzer will hit the shelves shortly. The company has poured a lot of marketing dollars into getting the word out about the product. On the company's recent earnings call, Hattersley stated:

Vizzy has already made a name for itself in the increasingly crowded U.S. hard seltzer market. Despite not launching nationally until April, it is already the number three seltzer in a number of markets and is beating Bud Light seltzer in repeat purchase rates.

Of course, the initial sales result is unsurprising given the company's push. While management's comment about repeat purchases is encouraging, it is way too early to draw any conclusions. As the CEO mentioned, the field is becoming increasingly crowded, including Constellation Brands' recent offering.

If the company was merely going through a difficult stretch due to the pandemic and the down economy, this would present a compelling opportunity. Unfortunately, there is more going on as it tries to keep up with changing consumer tastes in an ever-burgeoning field.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.