MillerCoors profit up despite sluggish beer sales

By Emily Bryson York
Posted Nov. 3, 2010 at 7:18 a.m.

MillerCoors said cost cuts and price increases helped it improve third-quarter profit 36 percent despite soft sales in a “sluggish U.S. beer market.” Excluding special items, net income increased to $334 million from a year ago.

Total net revenue increased slightly, 0.3 percent to $2.02 billion, and net revenue per barrel, excluding company-owned distributors and contract brewing, increased 2.4 percent. Domestic sales to retailers declined 4 percent, while sales to wholesalers declined 2.7 percent.

“It is still a tough market environment, but we are encouraged by our recent premium light trends and the continued strong momentum of our Tenth and Blake portfolio,” Leo Kiely, chief executive officer of MillerCoors, said in a statement.

Tenth and Blake is the company’s subsidiary for craft-style beers such as Blue Moon and Leinenkugel. Craft beers, while a relatively small piece of the market have continued to grow sales and build market share while major brands have faltered.

MillerCoors, a Chicago-based joint venture between London-based SABMiller plc and Denver-based Molson Coors Brewing Co. markets and sells major beer brands including Miller Lite, Coors Light, Blue Moon, and Leinenkugel and imports like Pilsner Urquell in the United States and Puerto Rico.

By brand, Coors Light and Miller Lite volumes declined in the low single digits. The company reported that Miller Lite’s declines have stabilized since the launch of its “vortex” bottle. Volumes of MGD 64, which has suffered since the launch of Bud Select 55 fell in the double-digit range.

The Tenth and Blake craft and import group grew double digits, thanks to double-digit increases for Blue Moon, and high-single digit increases for Leinenkugel. The company cited success in its recent “craft beer can” push, as well as seasonal brews.

Lower-priced brands also fell, in the mid-single-digit range. The company cited declines in Miller High Life and Milwaukee’s Best for the slip.

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