Molson Coors says Beer Store changes could raise prices

CEO Glendinning said changes could create a volume for beer volumes in Ontario.

MONTREAL — Changes to The Beer Store being contemplated by the Ontario government could raise prices and undermine the health of the beverage sector, the CEO of Molson Coors said.

“My overall worry is that we create a problem for beer volumes in Ontario,” Stewart Glendinning said in an interview after the company reported disappointing fourth-quarter results.

“Ultimately I want a market that is competitive and healthy, where people compete on the basis of their products and consumers get to choose the products they want at prices that are low for them.”

A panel chaired by former TD Bank CEO Ed Clark has recommended the province charge the Beer Store a fee for it virtual monopoly, saying there was a clear value that could be auctioned off if the beer companies don’t pay up.

The Beer Store, the commercial name for Brewers Retail, was the property of a consortium of Ontario-based brewers when set up in 1927, but now is owned by Molson-Coors of the US, AB InBev of Belgium and Sapporo of Japan. It operates 448 retail stores across Ontario and controls 80% of beer sales in the province.

Glendinning described the retail outlet as a break-even co-operative that is so low-cost it enables the province to charge high taxes that account for 44% of the purchase price of beer.

He declined to say what level of fee Molson Coors would accept and wouldn’t say if it would pursue a legal challenge if the government launches an auction.

“I’m sure that there will be some change. I’m waiting to see what that is going to look like,” he said.

Meanwhile, Glendinning said The Beer Store’s proposal to open up its ownership to craft brewers would create increased transparency. But critics contend that having only a few seats on the board will give the craft brewers little say.

Meanwhile, Molson Coors missed analysts profit expectations as its fourth-quarter net earnings fell nearly 32% to US$94.1 million on lower sales due to currency fluctuations.

Net sales dropped 5.3% to US$973.8 million, but would have been up 0.9% if currency values were constant.

In Canada, adjusted pretax income fell 14% to $76.2 million. The lower Canadian dollar reduced profits by $5 million. Sales were down 8.7% to $423.1 million.

Coors Light volumes declined 2% in the quarter, continuing a trend that began nearly three years ago. Molson Coors plans new advertising and in-store support in the coming weeks to turn things around. It will also increase promotional support in Quebec for Molson Export to reverse declining market share.

© 2015 The Canadian Press

1 Comment » for Molson Coors says Beer Store changes could raise prices
  1. John Evelyn, C.E. T., Rtd says:

    44% tax on beer is ridiculous. Enough of these tax grabs!!!!!!!

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