Beer is one of the world’s oldest and most consumed beverages, with a history that dates back thousands of years.

It’s a staple in social gatherings, celebrations, and quiet moments at home. Even in times of economic uncertainty and downturns, beer consumption tends to remain steady.

People may cut back on luxury items, travel, or dining out, but beer, particularly in its more affordable forms, often stays in the shopping cart. It’s a product that doesn’t face the same level of volatility as other goods.

While preferences and trends may shift, such as the growing interest in craft beers and premium labels, beer remains a constant in many households.

With such a steady demand, beer producers are often in a good position to maintain profitability, even when other parts of the market struggle.

Molson Coors Beverage (TAP) is one of the largest beer producers in the world, ranking fourth globally.

Headquartered in the U.S., it controls a massive 23% of the North American beer market by volume, showing its entrenched position in the region.

The company’s brands are household names, with products like Coors Light, Miller Lite, and Molson Canadian holding strong market positions.

This broad portfolio across multiple beverage categories helps cushion the company from being overly dependent on one product line.

A key strength of Molson Coors lies in its ability to adapt to changing consumer preferences. Recently, the company has focused on premiumization, particularly in the EMEA and APAC regions.

By offering higher-end products at premium price points, it’s been able to boost sales and improve its product mix, even as volumes in some areas decline.

This shift helps counteract margin pressures and positions Molson Coors to capture new segments of the market, particularly those willing to pay more for a higher-quality experience.

What also makes it defensive is the nature of its product, beer is recession-resistant.

The company’s wide range of brands ensures that it can cater to consumers across the socioeconomic spectrum, providing stability in both good and bad economic times.

Even when the broader economy struggles, beer remains a staple, and Molson Coors’ massive footprint means it’s well-positioned to continue benefiting from this consistent demand.

Currently, the market is concerned about the company, predicting that it will struggle to maintain its profitability in the coming years.

While it’s true that Molson Coors might experience some margin pressure, it’s unlikely that revenues will fall off a cliff.

The company has been working on initiatives that help mitigate these pressures like focusing on premium products.

Even with potential volume declines, the higher price points and favorable sales mix of these premium beverages are expected to offset the impact.

Additionally, Molson Coors’ ongoing efforts in the spirits and non-alcoholic beverage markets will help balance any potential market share losses.

Furthermore, the company is actively reducing its debt, which not only lowers its financial risk but also frees up capital for future growth, whether through acquisitions or buybacks.

The recent acquisition of Blue Run, a high-end whiskey business, is just one example of how it’s diversifying its product portfolio to appeal to changing consumer tastes. This move will help drive demand and further secure its profitability.

With steady demand for its core products and growth potential in premium offerings, Molson Coors is in a good position to defy the market’s expectations.

Its defensive nature, especially in tough economic times, ensures that its business model remains solid, making it a strong candidate for sustained profitability.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

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