Molson Coors Beverage Company’s TAP U.S. craft division, Tenth and Blake Beer Company, plans to buy Detroit-based Atwater Brewery. Atwater has been a leader in the Michigan craft community for more than two decades. It is popular for traditional German-style lagers and unique ales. Additionally, Atwater produces hard seltzers and craft spirits, and also operates three unique taphouse and biergarden locations in Detroit, Grosse Pointe Park and Grand Rapids.
Molson Coors anticipates closing the transaction within the next few months. However, the terms were not revealed.
The acquisition of Atwater Brewery is likely to complement Tenth and Blake’s craft portfolio, which includes the Jacob Leinenkugel Brewing Company, AC Golden Brewing Company, Saint Archer Brewing Company, Terrapin Beer Company, Hop Valley Brewing Company and Revolver Brewing. Notably, Tenth and Blake’s regional crafts posted volume increase of more than 16% in 2019.
Molson Coors is on track with its revitalization plan, which was launched in October 2019. The plan focuses on generating savings that are reinvested across its portfolio.
Molson Coors intends to invest in iconic brands and growth opportunities in the above-premium beer space; expand in adjacencies and beyond beer, without hampering the support for its existing large brands; and create digital competencies for commercial functions, supply-chain-related system capabilities and employees.
To facilitate these investments, the company plans to generate savings of nearly $150 million by simplifying structure. It plans to streamline its business units into two segments — North America and Europe. Currently, the company has a corporate center and four business units, including MillerCoors in the United States, Molson Coors Canada, Molson Coors Europe and Molson Coors International.
Apart from these, the company’s revitalization plan, aimed at achieving sustainable sales growth by improving efficiency and unlocking resources to reinvest in business opportunities, bodes well. Also, it is witnessing significant benefits from the execution of its premiumization and cost-saving initiatives. With a view to accelerate portfolio premiumization, the company has made significant additions to its above-premium brands’ portfolio.
However, Molson Coors has been struggling on the bourses owing to persistent softness in volumes and high input cost. It has been posting weak beer volumes in the United States for quite some time, owing to tough industry conditions.
We note that shares of the Zacks Rank #3 (Hold) company have decreased 4.1% in the past three months against the industry’s growth of 3.2%.
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Constellation Brands Inc. STZ has a long-term earnings growth rate of 8.2%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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