Molson Coors slashes outlook again, blames Trump tariffs on aluminum

Core Viewpoint - Molson Coors has revised its financial outlook downward for the second time this year, attributing the decline to new aluminum tariffs that are increasing cost pressures on the beer industry [1][5]. Financial Outlook - The company expects net sales to decrease by 3% to 4% this year, a more significant drop than the previously forecasted 1% decline [1]. - Earnings before taxes are projected to fall by 12% to 15%, compared to earlier expectations of only minor decreases [2]. Impact of Tariffs - The increase in aluminum tariffs, which rose from 25% to 50%, has led to higher-than-expected indirect impacts on aluminum pricing, particularly affecting the Midwest Premium pricing for aluminum used in beer cans [3][12]. - The new tariffs apply broadly, affecting all suppliers, including traditional partners like Canada and Mexico [3]. Market Conditions - Beer sales are declining, with U.S. volumes dropping over 5% in the second quarter, as consumers shift towards alternatives like hard seltzers and craft cocktails [8]. - Total volumes in Western Hemisphere markets fell by 6.6% during the quarter, indicating widespread weakness in the beer category [9]. Competitive Landscape - The company is losing market share as competition intensifies, with European, Middle Eastern, African, and Asia-Pacific volumes declining nearly 8% [8]. - Bank of America has downgraded Molson Coors, citing structural headwinds in the beer industry and predicting a 4% decline in U.S. beer volumes this year [9]. Strategic Responses - Molson Coors is currently absorbing much of the increased aluminum costs rather than passing them on to consumers, which is impacting profit margins [6]. - The company is focusing on premium brands and forming partnerships, such as with Fever-Tree, to diversify its portfolio and offset mounting pressures [16].