Coors And Miller Lite Shine As Bud Light Fumbles: A Dramatic Turn In The Beverage Battle

In a time when the beverage industry is seeing dynamic shifts, one brewing giant, Molson Coors Beverage Company TAP, has seized the opportunity to fortify its position in the market. 

Recently, Molson Coors Beverage unveiled its plans to buy back shares worth $2 billion over the forthcoming five years, a move signaling an accelerated buyback pace, especially when juxtaposed against the $51.5 million it repurchased in 2022, reported the Wall Street Journal.

Amidst these strategic moves, the company witnessed an uplifting nod from S&P Global Ratings. The credit rating agency elevated its rating by a notch, recognizing Molson Coors' efforts in trimming its debt while ensuring the intended share repurchases remain unaffected.

The report noted that Molson Coors' financial health displays an encouraging trend. As of June 30, its net debt to EBITDA ratio settled at 2.5, demonstrating a significant reduction from 4.8 in late 2016.

This improved financial posture was subsequent to its acquisition of the remaining stake in the MillerCoors LLC U.S. joint venture.

Molson Coors reported an 11.8% surge in net sales for the second quarter, totaling $3.27 billion.

Moreover, the net income figure of $342.4 million was a stark contrast to the previous year's $47.3 million.

One notable driver of this growth stems from a controversial move by competitor Bud Light. The brand faced a significant backlash after collaborating with a transgender social-media influencer in April.

This blunder resulted in a drop of about 30% in Bud Light's U.S. volumes every month, with no recovery in sight, the report cited Gerald Pascarelli of Wedbush Securities.

"Certainly the Bud Light situation has helped, but it wasn't this windfall that sort of fell into our laps," the report quoted Chief Financial Officer Tracey Joubert. "The work that we've been doing over the last 3½ years was to get all of our brands strong and help consumers to turn to us when they could have gone anywhere."

The credit-rating upgrade will help the company get lower interest rates to refinance debt, invest in commercial paper, and hedge risks from volatility in commodities and currencies, Joubert said, as per the report.

The combined market share of Coors Light and Miller Lite outstripped Bud Light for the first time in decades by the end of 2022.

Molson Coors shouldn't write off a potential rebound from Bud Light's owner, Anheuser-Busch Inbev SA  BUD, which has long been a formidable competitor, the report cited Dan Su, an equity analyst covering beverages at Morningstar's research arm.

Price Action: TAP shares are trading higher by 2.25% at $60.46 on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.