Bud Light's woes become Molson Coors' gain

Molson Coors' reported record revenue in the second quarter, though it still fell short of analyst estimates. The brewer has benefited from the backlash against Bud Light, which suffered from a boycott after trans-influencer Dylan Mulvaney posted about the brand on Instagram. Yahoo Finance breaks down Molson Coors' results.

Video Transcript

JOSH SCHAFER: Another story I'm following today is Miller Lite. Molson Coors, they had earnings out earlier today. And we saw the trend that we've been talking about for a couple of months now, guys, a decline in Bud Light sales, what did that mean for Molson Coors. Molson Coors delivered its single strongest quarter of net sales since Molson and Coors merged in 2005.

Now, revenue did come in actually a little bit lower than analysts had projected, not by much, but they singled out that Bud Light sales have been declining. And it led to benefits for what they've seen in Miller Lite sales, Coors Light sales. Now, the most important highlight of that, though, the stock closed down today, because some of that might already be sort of priced into the story, right? We've been talking about this story for a couple of months now, Pras, specifically over here in our little round table. And it seems like we might have already seen some of these benefits into the stock already.

PRAS SUBRAMANIAN: Yeah. I mean, look, I'm just still surprised at the lasting staying power of this Bud Light sort of boycott. We saw Modelo sales be the top selling brand in America for beer. And now, we're seeing Molson Coors brands, Coors Light, Coors Light, and Miller Lite topping Bud Light. I mean, look, they're all substitutable--

JOSH SCHAFER: No. What was the face on Coors Light? Because we can get into it. Are you not a Coors Light fan?

PRAS SUBRAMANIAN: They're all the same-- Coors Light, in my opinion, is like worse than Miller Lite.

JOSH SCHAFER: Yeah. I think they all basically taste the same. And that's what this discourse has been.

PRAS SUBRAMANIAN: Yeah. So you're not surprising that you would substitute one light filling, very, very, you know, just like water type beer for another one. But it's like I'm upset about the Dillon Mulvaney thing, right? That's the audience or the viewer or drinker sort of reaction.

So I just can't-- I'm surprised at how long the staying power is. I saw a report today that Bud Light wholesalers are saying, we don't see this ending. This has gone on for a long time.

JOSH SCHAFER: That's the part, Seana, that I think is interesting. And that's what a lot of street analysts are saying, too, is to process point, if they all taste like water and are already switched to a different water, who really cares what kind of water they drink?

SEANA SMITH: I guess, if you're saying. I actually think Bud Light is pretty good. If we're going to be judging the taste of it, I think Coors Light is fine.

JOSH SCHAFER: With a lemon. With a lemon only.

SEANA SMITH: With a lemon, that's what I always say. It helps it taste a little bit better. But I think this also just speaks to a larger issue. And we've talked about this time and time again. This boycott coming at a very tough time for Anheuser-Busch, really for any player within this space. When we talk about the fact that fewer and fewer people are drinking beer, they're opting for other alternatives that are out there right now. So combining that with this boycott, clearly, it's a very, very tough time for Anheuser-Busch.

In terms of the reaction that we're seeing in the stock today, Josh, I think you're exactly right, because I think a lot of this has already been priced in. We've seen a number of analysts on the Street either upgrade their outlook for Molson Coors, raise their price targets because of the fact that this boycott was lasting so much longer than I think almost anyone had anticipated. Whether or not that is gone for good, we're hearing more and more people say, to what you guys are saying, that is exactly right. We're not going to see people shift back to Bud LIght.

So I think the question now is, what exactly is going to be the strategy from Anheuser-Busch? What can they do in order to regain some of that market share? Maybe it's not betting so much on beer. Maybe it's betting more so on that ready-to-drink cocktail on some of the other options that younger drinkers tend to gravitate to.

JOSH SCHAFER: And one other thing I want to highlight while we're talking about this, of course, is Anheuser-Busch earnings are on Thursday, right? And I just took a look, the stock is only down 5% year-to-date, but when you think about how much we've been talking-- how much we've been talking about this, how much the sales have been down. We've seen sales fall as much as 30% on a weekly basis for Bud Light compared to the year prior.

And I think part of it is, in a larger context, in America, we focus so much on Bud Light, because a lot of people drink it here. But Anheuser-Busch is a global company. And I they'll probably talk a lot about that on Thursday and the other parts of revenue that they still have going. But it's going to be interesting to see how that stock reacts on Thursday, because, you know, the numbers aren't going to be good. And they're going to have to admit that things aren't going that well. So what is the turnaround strategy? Can you see that stock not fully tank on Thursday when the bad numbers come out?

PRAS SUBRAMANIAN: Real quick, you mentioned other types of drinks, you know, spirits overtook beer recently. And I think Cutwater-- is it the name of that brand that Bud owns, that's like they mix drink sort of alternative? That's doing well. All my favorite hard seltzer is doing well. So maybe that's where we're going to see that growth.