New York (CNN Business)Molson Coors is struggling as younger drinkers continue to shun mass-produced beer for trendy beverages like White Claw and other “spiked seltzers.” On Wednesday the company announced that it’s laying off workers and subtly changing its name.
Molson Coors (TAP)
, which also makes Coor’s Light, Blue Moon and a number of other beers, announced the changes in conjunction with its latest earnings report, which was not good. Shares fell 4% on the news.
Sales and profit were both down from a year ago and missed Wall Street’s forecasts. The company also announced a restructuring that will lead to between 400 and 500 job cuts. According to the company’s latest annual report, Molson Coors had about 17,750 employees worldwide, 7,300 of them located in the US.
Molson Coors said it plans to consolidate and reorganize office locations. Its Denver office will close, a stunning decision considering how synonymous Coors and Coors Light are with Colorado and the Rocky Mountains.
Chicago will become the company’s new North American operational headquarters. Molson Coors also said that several positions that were based in offices throughout the US will now all be moved to its Milwaukee office.
The company said that it expects to incur restructuring charges — such as severance, employee relocation expenses and costs tied to exiting a lease in Denver — of about $120 million to $180 million over the next two years.
A need for fresh new beverages
“Our business is at an inflection point. 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,” said Molson Coors CEO Gavin Hattersley, who took over as CEO last month.
“Our revitalization plan is designed to streamline the company, move faster, and free up resources to invest in our brands and our capabilities,” he added.
As part of the changes, Molson Coors says it will invest “significantly” in pricier beers in what it dubbed the “Above Premium” category — which the company said is the fastest growing part of the beer industry.
But the company also said it plans to move “beyond beer.” Molson Coors has already launched canned wine and “hard” alcoholic coffee products this year, and the company said it will look to launch even more non-beer products. Hence, the name change.
Molson Coors said it will also put a bigger focus on innovating more quickly — with a goal of reducing the time it takes to bring new products to market from 18 months to as little as four months.
The moves are clearly an attempt to lift sagging sales. And Molson Coors is not the only alcoholic beverage company that’s trying to diversify to rejuvenate its growth.
Budweiser brewer AB InBev (BUD)
has also been hurt by weak beer sales in the US — as well as China
— and has committed to get bigger in the spiked seltzer market as a result. And Corona owner Constellation Brands (STZ)
has bet on cannabis, taking a large stake in Canadian pot company Canopy Growth (CGC)