Molson Coors CEO on beer trends amid the pandemic

Molson Coors CEO Gavin Hattersley joins Yahoo Finance Live to discuss beer trends amid the coronavirus pandemic, including how its made e-commerce a critical area of focus, and his outlook for the alcohol industry.

Video Transcript

JULIE HYMAN: I want to turn from looking pretty to maybe feeling a little better in this environment and talk about what people are consuming in terms of their alcoholic beverages at this time. Let's bring in Gavin Hattersley. He is Molson Coors CEO. Thank you so much for being here, Gavin.

You have talked a lot about the switch in people's habits where, obviously, they're not going to bars right now because, in many cases, bars are not open. And they're drinking at home. And that has been a real challenge for you guys. How have you been shifting production, shifting where you're sending product to try to adapt to all of this?

GAVIN HATTERSLEY: Good morning, Julie. Thanks for having me on your show. Yes, we've made a lot of changes over the last eight months or so. Coming into the-- into the pandemic, we obviously had a very steady on-trade business. It's about 17% of our business in North America, quite a lot more than that in our European business. But, overnight, it shifted into the-- into the off-premise. And that did raise challenges for us in terms of sourcing cans because we see-- we saw the consumers moving into cans, primarily, and large-pack cans and going to big and trusted brands like Miller Lite and Coors Light.

So, certainly, in the early days of the pandemic, we had a tough time keeping up with demand. But, as we've gone further into the pandemic, we've really learned how to operate safely, keep our employees first, make sure they're safe, and we've scoured the world for cans. So we've got a substantial number of cans coming in from all parts of the world. We commissioned a new sleek-can line, which has got a 750 million capacity per annum, and it's running very well.

So, you know, we've adapted. We always had plans to adapt to the e-commerce space. And, of course, during the pandemic, we've seen a substantial increase in e-commerce trade.

I mean, our revenue from e-commerce in the US is up about 230%. And that's a consumer habit that I think is going to stick around because, before the pandemic, 80% of people didn't even know you could buy beer online. And now they do, and I think they'll continue to do so.

BRIAN SOZZI: Well, I'm glad you got the cans, Gavin. I need my Coors Light on a Friday, especially, after jobs day. It's been a heck of a week.

GAVIN HATTERSLEY: Excellent.

BRIAN SOZZI: But do you, ultimately, expect-- do you expect-- listen, bars-- really you could speak to this better than I could. Bars have been closed. The entire beer industry has been hurt because of that and because of the pandemic. Do you expect those sales to come back?

GAVIN HATTERSLEY: Look, I do think, obviously, the on premise will come back. I think it's going to take a long time for it to come back to pre-pandemic levels. You know, it doesn't matter what city or town you drive through in America. You're going to find a closed restaurant and a closed bar. And some of them are never going to come back.

I do think that, with consumers moving back to tried and trusted brands that they know and love and trust like the Coors Light you're going to have tonight or Miller Lite or Blue Moon, I think you're going to find those faster-moving brands more readily available in the on premise compared to a plethora of tap handles that might have been there before. So, you know, when bars and restaurants did reopen in summer and towards the end of fall, we did see a tick up in the share of Miller Lite and Coors Light, primarily, for that reason.

MYLES UDLAND: You know, Gavin, I want to go back to the online sales, which you mentioned, because, if you think about the alcohol category, at least, as I think about it, as a consumer, it tends to be a lot more spontaneous. I don't really know what I'm going to drink. I look at the taps and say that sounds good.

If I'm shopping online, it has to be more deliberate. Are you changing how you're thinking about the kind of marketing program across the business with that in mind or sort of weathering the storm as it is now and hoping that, you know, things go back into your wheelhouse maybe in a couple of years?

GAVIN HATTERSLEY: Well, we've certainly increased our capability in this space, not only from an IT point of view, but from a people resource point of view. We've put a number of increased roles into this area. And our marketing team and our media teams have adapted very quickly during the pandemic.

So I think you will find that the presence that we had in online e-commerce sites before the pandemic and what we look like now are much, much different. And it's, certainly, in a much more positive way. As I said, I don't think this is a trend that's going to go away. It will probably slow down a little bit. I mean, you can't keep growing at over 200% forever, but it's here to stay in our view. And we intend to be really at the front end of this.

BRIAN SOZZI: Gavin, you caught my attention and I suspect a lot-- attention of a lot of folks on TheStreet. On your last earnings call, you teased that you're starting to bring CBD drinks to the US. Have they launched? And what's your rollout plan there?

GAVIN HATTERSLEY: Yes, well, we did launch with THC ready-to-drink products up in Canada, and the early signs of those are doing really, really well. Our data says that we're already the number one RTD THC-infused beverage in Quebec. And we see a path to being the number one in the whole of Canada in short order.

In the US, we've brought CBD products to Colorado. We actually launched them this week, so a little too soon to tell how they're going to do, but we're using the same brand names as we're using up in-- up in Canada. The product apparently tastes really good. I haven't had a chance to taste it myself, but we're excited about it. And we intend to be a player.

JULIE HYMAN: And let's also talk about product innovation when it comes to seltzer, which we're showing on the screen right now and I believe you have over your left shoulder.

GAVIN HATTERSLEY: That's right.

JULIE HYMAN: The seltzer has been huge obviously. You guys are a little bit late to the party when it comes to seltzer. How do you-- what's the rollout plan? What's the game plan to really try to grab some market share in that hot category?

GAVIN HATTERSLEY: You're right. I mean, we came into the year with less than 2% of the market. We've doubled that share. We're at about 4% now, and we've got two brands in the marketplace at the moment with Vizzy and Coors Hard Seltzer. And we've got two more coming in the first part of next year, Topo Chico Hard Seltzer and then, also, Proof Point.

We think those four brands are highly differentiated from themselves, and they're also highly differentiated from the marketplace. And we think that that's a powerful portfolio that we can bring to the consumer, the retailer, and our distributors. And, you know, we've put a goal for ourselves out there of getting to 10% market share by the end of next year. And we think that's a reasonable goal with the four brands that we're going to have.

BRIAN SOZZI: Gavin, if there's one small knock here on Molson Coors, at least, talking to-- talking to TheStreet, you guys are doing a lot. You have a lot of things going on in the company that, perhaps, you're just doing too much. How would you respond to that? And is there some form of a cost takeout program you're looking at to just more efficiently run your business? Because maybe the core business of beer is not what it used to be.

GAVIN HATTERSLEY: Well, you've hit the nail on the head there, right? That was our plan, which we launched in October of last year. We restructured ourselves to declutter, to reduce bureaucracy, and make us-- put us in a place where we could act much more-- much more nimbly. And that's the plan we're executing against this year.

So, you know, all the work that we've done over the last eight months is exactly what we said we were going to do in October last year-- continue the focus on our big and iconic core brands of Miller Lite and Coors Light and Molson Canadian and Carling, push into the above-premium space in a much more deliberate way, and then move into non-alc beverages and emerging growth space. You know, we said that we were going to do that. I think we've done it extremely effectively. We structured ourselves quite deliberately so that we wouldn't have each of these areas trip over each other, and it's working really well, actually.

JULIE HYMAN: Gavin, thanks for spending some time with us this morning. Gavin Hattersley is the Molson Coors CEO. Thank you, sir.

GAVIN HATTERSLEY: Thank you for having me.