Is Molson Coors' Focus on Premiumization Enough to Offset Soft Volume?

Molson Coors Beverage Company TAP has made premiumization a central pillar of its long-term growth strategy, aiming to enhance margins and consumer appeal. The company is actively shifting its portfolio toward higher-margin products such as Peroni, Madrí and Blue Moon, while also expanding its presence in the non-alcoholic and beyond-beer categories. Brands like Fever-Tree and ZOA are key investments in this space, reflecting Molson Coors’ ambition to serve a broader range of occasions and consumers, especially among Gen Z. These moves are designed to capitalize on evolving consumption trends and strengthen the company’s position beyond mainstream beer.

Despite these efforts, Molson Coors is grappling with a challenging macroeconomic backdrop that continues to weigh heavily on volume performance. In first-quarter 2025, consolidated net sales revenues declined 10.4%, and U.S. financial volume dropped 15.7%, reflecting softer consumer demand and shipment headwinds. Although net sales revenue per hectoliter rose 4.8% in the Americas, driven largely by premium mix gains and pricing, this was not enough to fully offset the steep volume declines. These results suggest that while premiumization is helping to cushion the impact, it alone cannot fully counteract broad-based volume pressures.

However, early signs from newer premium products are encouraging. Peroni, for example, has seen increased on-premise placements and retail expansion in the United States, aided by cost savings from onshore production. Similarly, Madrí is showing strong global growth, now a top 10 global brand for Molson Coors despite being just four years old. The company also launched Blue Moon Non-Alc and Blue Moon High ABV extensions, aiming to attract health-conscious and value-seeking consumers. These brands not only support margin growth but also help Molson Coors diversify away from declining contract brewing volumes.

While premiumization is a vital part of Molson Coors’ growth story, it is not yet sufficient to fully offset the volume losses that are caused by macroeconomic headwinds and changing industry dynamics. Nonetheless, the company’s commitment to strengthening its premium portfolio, combined with disciplined cost management and innovation, positions it well for the medium to long term. If the broader beer category stabilizes and premium innovations continue to gain traction, Molson Coors could see greater balance between volume and value growth in the future.

TAP’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #5 (Strong Sell) company have lost 8.9% in the past six months, underperforming the Zacks Beverages - Soft Drinks industry’s growth of 9.7% and the broader Consumer Staples industry’s return of 6.8%.

TAP Stock's Six-Month Performance

Is TAP Stock a Value Play?

Molson Coors shares are currently trading at a forward 12-month price-to-earnings (P/E) multiple of 8.27X, which positions it at a discount compared with the industry’s average of 15.45X. The stock is undervalued compared with its industry peers, offering compelling value to investors looking for exposure to the consumer staple sector.

TAP P/E Ratio (Forward 12 Months)

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This article originally published on Zacks Investment Research (zacks.com).

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