Soaring inflation has left beer drinkers in some European countries unable to ‘bear’ rising drink prices, the chief executive of Molson Coor has warned, as the brewer behind brands like Carling and Miller Lite announced a halving of its profits in the third quarter.
Hampered by high costs, shrinking consumers in Central and Eastern Europe and the strong dollar, the Chicago-based company’s net profit fell 52.2% to $216.4 million last quarter, from 453 million dollars a year ago.
“In some markets, it has been difficult to keep up with the rise and pace of inflation,” chief executive Gavin Hattersley told analysts on an earnings call on Tuesday. “Historic” price increases of nearly 10% for its drinks this year have not been enough to offset the brewer’s higher costs.
Overall costs rose 20% as prices for materials, transportation and energy rose alongside $192.6 million in changes to unrealized commodity positions. Costs increased more in Europe, the Middle East and Asia-Pacific regions than in the Americas.
In Central and Eastern Europe, demand has weakened because “some consumers simply cannot afford higher price levels” as they face runaway inflation, particularly on energy costs , Hattersley said.
Given its global presence, the company suffered $109 million in revenue due to the strong dollar, chief financial officer Tracey Joubert said on the same call. Total revenue for the quarter was $2.94 billion, compared to $2.82 billion a year ago.
Still, Molson Coors reaffirmed its 2022 sales forecast, optimistic about a boost from the upcoming FIFA World Cup. However, pre-tax income growth is expected to be at the lower end of the range.
Hattersley pointed to consumer strength in Western Europe and the United States, with demand in the former “holding up strongly”.
“The American consumer remains resilient to this day,” he said, with some continuing to trade premium beers and no “significant” declines.
Shares of Molson Coors fell 3.5% in afternoon trading in New York on Tuesday.
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