MolsonCoors’ newly appointed President and CEO Gavin Hattersley this morning laid out a sweeping corporate restructuring and revitalization plan aimed at streamlining the organization and reinvesting USD 150 million annually in its business around the globe.
The company will be renamed from Molson Coors Brewing Co. to Molson Coors Beverage Co. effective Jan. 1 to reflect the changing focus away from beer and towards other beverages, the world’s fifth-largest brewing company reported in its news blog.
In order to streamline the business, the operation will be consolidated from four business units to two. Molson Coors will combine its U.S. business, MillerCoors, with its Latin America business and Molson Coors Canada and part of Molson Coors International to form a North America unit, which will be headed by Pete Marino. In this context, MillerCoors, its U.S. corporate brand name adopted at the time of the formation of a joint venture in 2008, will be retired.
The remainder of Molson Coors International will be folded into Molson Coors Europe and will form the second business unit. The Asia, Pacific and Africa team will be integrated into the Europe business unit, which will be led by Simon Cox. The new structure will allow for standalone operations that includes local leadership, commercial, supply chain and support functions.
As sources close to the business reported to inside.beer, Molson Coors is also considering a closer cooperation with its rival Asahi Group Holdings in Europe, namely for the business in the former socialist countries in eastern Europe. The two companies are reputedly in open discussions about either a sales cooperation, a swap of companies or even a merger of the respective businesses.
In 2016, Asahi bought the former SABMiller breweries in Western and Eastern Europe as part of the largest takeover in the industry, when AB InBev took over the number two brewer in the world SABMiller in a deal worth more than USD 100 billion (inside.beer, 28.9.2016).
Four years before in 2012, Molson Coors acquired StarBev, a group of breweries in Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Romania, Serbia and Slovakia which AB InBev sold in 2009 to private equity group CVC Capital Partners. The group never performed up to the expectations.
Pretax-income in Europe decreased in the last three months until 30.9.2019 in comparison to the same period of last year by 19.3% to USD 77.5 million, as stated in the third quarter results which were published today. However, overall pretax-income was even worse. Molson Coors reported last quarter a loss of USD 308.6 million mainly induced by a USD 668.3 million goodwill impairment charge of the Canada business.
Underlying consolidated EBITDA of Molson Coors in the third quarter decreased by 7.1% to USD 702.6 million
"Our business is at an inflection point,” Hattersley said, in a statement. “We can continue down the path we’ve been on for several years now, or we can make the significant and difficult changes necessary to get back on the right track.”
“As the world around us rapidly changes and the nature of competition intensifies, our business performance is lagging. We’re over-indexed in declining segments, our core brands have seen years of volume losses, and we haven’t had the resources needed to fully invest behind our innovations,” he said in a note to employees.
The changes are “designed to streamline the company, move faster and free up resources to invest in our brands and our capabilities.”
Hattersley took over the position in the holding company last month from Mark Hunter, who had performed this role for the last four years. In July, Andrew Molson chairman of the Molson Coors Board said in a statement, Hunter who is the same age as his successor Hattersley “indicated his desire to retire from his position as Molson Coors President and CEO" in order to spend more time with his family. (inside.beer, 31.7.2019).
The new CEO and President is also willing to apply harsh measures which will result in a loss of 400 to 500 jobs which will come primarily in North America and from Molson Coors International.
Molson Coors will close its Denver office and make Chicago its North American commercial headquarters. The move will enable the company “to move much more quickly with an integrated portfolio strategy,” Hattersley said.
Most support functions, including finance, information technology, procurement, supply chain, legal and human resources, will be consolidated in Milwaukee. The company will continue to maintain global business services offices there and in Bucharest, Romania.
Molson Coors said savings by simplifying its structure of about USD 150 million will be funneled into investments in its core brands, growing its portfolio of above-premium beers, expanding beyond beer and new digital capabilities. Under the new plan, “we’ll be able to meaningfully invest across our portfolio, and invest in the capabilities we need to compete in the complex marketplace of today and tomorrow,” Hattersley said.
It will continue to pour resources behind big ideas like CoorsLight’s “Made to Chill” campaign and MillerLite’s newly launched “It’s Miller Time” campaign. Resources will also flow into the above-premium segment, putting more money behind emerging brands such as Saint Archer Gold, Blue Moon Light Sky, Cape Line and Arnold Palmer Spiked in the U.S., and Coors Slice in Canada.
Molson Coors will pursue beyond beer opportunities, such as a hard coffee and a canned wine in the U.S., a cider expansion in the U.K. and Truss’s forthcoming line of cannabis-infused nonalcoholic beverages in Canada. For this reason the company is expanding the model that has reduced the time it takes to bring innovations to market from 18 months to as little as four months in the U.S. and expanding a “test and learn” approach that evaluates market potential for products and then quickly scales up.
As part of the revitalization plan, the company will also invest in improving its digital capabilities, expanding data resources and building out innovation systems. This will better enable precision marketing and improve e-commerce abilities.
New investments in leadership and growth opportunities for employees will help build an inclusive culture and diverse workforce, the comapny said.
In connection with these consolidation activities and related organizational and personnel changes the company currently expects to incur certain cash and non-cash restructuring charges related to employee relocation, severance, retention and transition costs, non-cash asset related costs, lease exit costs in connection with office leases in Denver, Colorado, and other transition activities estimated in the range of approximately $120 million to $180 million in the aggregate, the majority of which will be cash charges that will be spread through the balance of this fiscal year and fiscal years 2020 and 2021.
The consolidation activities are expected to be substantially completed by the end of fiscal year 2021. Costs related to these restructuring activities are expected to be recorded as special items within the financial results beginning in the fourth quarter of 2019.
Separately, Molson Coors will continue its ongoing efforts to modernize its brewery footprint and will also invest several hundred million dollars to modernize its brewery in Golden, CO. These plans, according to the statement, will allow for more flexible capacity to better meet demand and fulfill future growth opportunities, while increasing supply chain efficiency. The company is not using the cost savings generated from the revitalization plan to make this previously planned brewery investment possible.
“For nearly 150 years we have brewed great beers in Colorado, and we will continue to brew great beers in Colorado for hundreds of years to come,” said Hattersley. “This investment will modernize the brewery to allow for more flexibility, enable us to move with pace and deliver new products to meet changing consumer preferences.”
As part of the consolidation of the Global, MillerCoors, Canadian, and MCI leadership teams Hattersley announced today the following changes to the leadership team which will assume their roles effective November 1.
- Adam Collins, chief communications and corporate affairs officer
- Simon Cox, president and CEO of Molson Coors Europe
- Kevin Doyle, president of U.S. sales
- Brian Erhardt, chief supply chain officer
- Rahul Goyal, chief strategy officer
- Tracey Joubert, chief financial officer
- Fred Landtmeters, president of Molson Coors Canada
- Pete Marino, president of emerging growth
- Dave Osswald, chief people and diversity officer
- Lee Reichert, chief legal and government affairs officer
- Michelle St. Jacques, chief marketing officer
As Molson Coors moves to a North America and Europe structure, there will no longer be a President of the U.S. business.
Two longtime executives also will be retiring at the end of November:
- Celso White, who led the construction of two new breweries and Canada and played a key role in integrating the U.S. supply chain into Molson Coors; and
- Kandy Anand, who served as CEO of Molson Coors International and chief growth officer, where he oversaw the company’s entry into central and eastern Europe through the Starbev acquisition and led the company’s efforts to form a joint venture with Truss in Canada to enter the non-alcoholic cannabis beverage market.
At the end of 2019, Pete Coors also will retire as the company’s chief customer relations officer, stepping back from his day-to-day duties at the company. He’ll continue to serve as vice chairman of the Molson Coors board and as an ambassador for the company.