Shifting consumer preferences have softened demand across the alcohol industry in recent years as Americans have replaced liquor with healthier alternatives. 

As a result of shifting preferences, liquor consumption declined from 67% in 2022 to 54% in 2025. Moreover, beer, considered as the preferred beverage for 47% of U.S. drinkers, is now just favored by 34% of consumers

Beyond lifestyle changes, price inflation and other macroeconomic factors have forced households to trade down to cheaper alternatives or cut spending altogether. 

As a result, these trends have dampened the profitability of companies like Molson Coors (TAP).

Molson Coors built its reputation as one of the most popular beer brands in the U.S. and owns well-known brands such as Coors, Blue Moon, Miller, and others. 

The company has historically delivered strong returns. From 2020 to 2024, it generated an average Uniform return on assets (“ROA”) of 22%. 

However, due to softening demand, Molson Coors has delivered lower-than-expected sales. And its most recent quarter reflects this.

Molson Coors reported $2.66 billion in revenue for the fourth quarter of 2025, marking a 2.7% year-over-year decline and also falling short of consensus estimates. Meanwhile, full-year net sales decreased by 4.2%.

Following the earnings announcement, Molson Coors shares fell 7% in after-hours trading. And over the past year, the stock is down 16%. 

In response, CEO Rahul Goyal acknowledged that 2025 was a tough year for the beer industry as it was a departure from historical trends and led to continued uncertainty. 

Goyal also said that in the medium term, Molson Coors intends to restore growth through increased investment in flagship labels like Coors Light and Miller Lite. The company also plans to invest in value brands in certain markets to attract price-conscious consumers

Time will tell whether these strategic moves will be enough to drive Molson Coors’ profitability upwards. What’s clear is that the market recognizes the threats hurting this company.

We can see what the market thinks through Valens’ Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

By 2029, the market expects Molson Coors’ Uniform ROA to decline to 11%, falling well below the 21% returns it delivered in 2024.

The market’s pessimistic outlook on Molson Coors’ profitability seems justified when its limited product portfolio and the pressures facing consumers are taken into account.

Even though this company’s stock looks inexpensive on the surface, there’s a good reason as to why it’s cheap in the first place.

Best regards,

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

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