Solid first quarter for SABMiller's US ops
Business Live - May 9th 2012, 08:13
It has been a solid first quarter for MillerCoors - the joint venture in the US between SABMiller and Molson Coors Brewing Company - driven by strong mix, positive pricing and unseasonably warm weather.
The companies reported on Tuesday that MillerCoors' first quarter underlying net income increased 16.6% to $275.3 million versus the first quarter 2011, driven by positive pricing growth, cost management and favourable mix.
"We delivered a solid first quarter in 2012," said MillerCoors CEO Tom Long. "Our sales trends improved, and we saw net revenue growth that was primarily driven by strong mix, positive pricing and unseasonably warm weather, particularly around St. Patrick's Day," he said.
"We also laid the ground work with the re-positioning of some of our top brands, such as Miller Lite and Miller64 and continued to deliver strong growth from Tenth and Blake, particularly from Leinenkugel's Summer Shandy. We are encouraged by our trend improvements, and we have the right strategy, programmes and people in place to continue growing our brand strength and earning customer preference," he added.
Total net sales increased 3.6% to $1.760 billion, while domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 3.9%. Total cost of goods sold (COGS) per barrel increased 0.9%. For the quarter, MillerCoors domestic sales-to-retailers (STRs) were down 1.6%.
"This performance represents meaningful improvement over the prior three quarters and was aided by unseasonably warm weather in the month of March across much of the country, particularly in core markets for MillerCoors such as in the Midwest and Northeast. Domestic sales to wholesalers (STWs) decreased 0.9%, and distributor inventory levels were lower at the end of the quarter than a year ago," the company noted.
Premium Light STRs were down low-single digits in the first quarter. Miller Lite declined low single digits and launched new advertising and brand positioning themed "It's Miller Time" in mid-March.
Although Miller64 volumes were lower than MGD64 volumes in the prior year, new brand positioning was introduced in early March with new advertising and packaging, which is off to a great start, the company said.
Coors Light grew low-single digits and kicked off two multicultural programs in the quarter - activation around MillerCoors' sponsorship of Mexico's First Division Soccer League and the Ice Cold Leader program, which rewards African American community leadership.
Tenth and Blake Beer Company continued to grow the MillerCoors Craft and Import portfolio by double digits in the quarter driven by increases in Leinenkugel's and Blue Moon. Leinenkugel's Summer Shandy was introduced a month earlier this year and saw particularly strong growth, more than doubling volumes. Peroni Nastro Azzurro grew high-single digits and continued to show strong growth in the on-premise market.
"The integration of The Crispin Cider Company and its affiliate Fox Barrel Cider Company is progressing well, resulting in a significant increase in cider production since the acquisition," the company noted.
The Below Premium portfolio declined low-single digits, as the company maintained appropriate price gaps between Premium and Below Premium beers. The Premium Regular portfolio was down mid-single digits with a double-digit decline by Miller Genuine Draft partly offset by low-single-digit growth of Coors Banquet.
SABMiller is due to report its 2012 annual financial results on May 24.
At 14:00 on the JSE, SABMiller's share price was up R2.91, or almost 1%, to R322.50.
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