The company is grappling with a declining U.S. beer market—industry volumes are now forecast to fall 4% this year, with this firm seeing falling sales and earnings. Consumer preferences continue to shift away from beer toward spirits, ready-to-drink alternatives, and healthier options. The trend is compounded by heightened competition in “Beyond Beer” categories and margin compression due to rising input costs (such as aluminum).
Recent financial performance has been weakened. And while the stock looks cheap at just 9.4 times forecast earnings (and the dividend yield is high), this reflects skepticism about the company’s ability to stabilize in the near term in the face of structural headwinds.
MOLSON COORS CANADA INC. (Toronto symbols TPX.A and TPX.B ; www.molsoncoors.com) is the world’s fourth-largest beer brewer. Its main brands include Molson Canadian (Canada), Coors Light (the U.S.) and Carling (the U.K.).
Under its plan to add non-beer drinks to its portfolio, Molson recently acquired the rights to produce, market and sell Fever-Tree products in the U.S. Based in the U.K, that firm makes a variety of tonics, ginger beers and cocktail mixers. As part of the deal, the company paid $90 million for an 8.5% stake in Fever-Tree’s parent company (all figures in U.S. dollars). Molson and Fever-Tree have also agreed to equally split the new 10% U.S. tariff on imports of U.K. beverages.
Solid dividend yield, but declining sales and earnings
Meantime, in the three months ended March 31, 2025, Molson’s sales fell 11.3% to $2.3 billion from $2.6 billion a year earlier. Excluding currency exchange rates, sales declined at a
slower rate of 10.4% as lower volumes (down 14.3%) offset higher prices (up 3.9%).
Without unusual items, earnings fell 49.9%, to $101.7 million from $202.8 million. Due to fewer shares outstanding, per-share earnings fell at a slower rate of 47.4%, to $0.50 from $0.95.
Molson last raised your quarterly dividend by 6.8% with the March 2025 payment, to $0.47 a share from $0.44. The annual rate of $1.88 yields 3.7% for the class B shares.
New U.S. tariffs on steel and aluminum are increasing the company’s packaging costs. As a result, its earnings for all of 2025 will probably decline 9% to $5.43 U.S. a share. The class B shares trade at just 9.4 times that estimate.
Recommendation in The Successful Investor: Molson Coors Canada Inc. is a hold.
