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Molson Coors Inks Licensing Agreement with Hornell Brewing

Molson Coors Brewing Company TAP recently signed a partnership agreement with Hornell Brewing Co., Inc., which is an affiliate of AriZona Beverages.

Per the deal, Molson Coors will have the license to market and distribute a new Flavored Malt Beverage (FMB) brand, Arnold Palmer Spiked Half & Half, through its U.S. division MillerCoors. The beverage is made of select teas and real juice sourced from across the world and contains 5% alcohol by volume.

Though the terms of the deal were not disclosed, the brand is set for introduction later this year. The brand will be launched nationally in early 2018.

Molson Coors has been struggling with weak sales volume trend in recent times. A difficult economy, unfavorable currency and competitive pressure are also its headwinds. The company’s dismal performance is reflected in its share price. Molson Coor’s shares have fallen 12.2% in the past one year, underperforming the Zacks categorized Beverages-Alcoholic industry’s decline of 3.3%. In order to revive its performance, Molson Coors has been focusing on expanding its foothold through strategic agreements and targeting above-premium brands to help grow its market share.

This new agreement is in line with Molson Coors’ current business expansion initiatives. The management is excited with this venture as it facilitates the improvement of the company’s brand portfolio. Moreover, the company believes that Arnold Palmer beverages has a strong brand following. This new agreement would aid Molson Coors to capture the momentum of ready-to-drink teas (both alcoholic and non-alcoholic) in the U.S. These beverages are popular and its demand has been rising.

The deal provides Molson Coors with prospects of undertaking product collaborations with Hornell Brewing and AriZona Beverages. The agreement also opens opportunities for the company to distribute the brand outside U.S.

Prior to the deal, Molson Coors made many important acquisitions and agreements. The ventures include a 10-year import agreement with Heineken and the acquisition of London-based SABMiller plc’s 58% stake in MillerCoors. In addition to such expansion initiatives, Molson Coors has also been vigilant on cost savings and restructuring which includes closure of underperforming breweries, improving efficiencies in finance, administration and human resources, plus reducing labor and general overhead costs. Further the company is focusing on innovation for expanding its beer category. We hope that such efforts would aid Molson Coors to overcome its ongoing challenges. The company currently carries a Zacks Rank #3 (Hold).

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Some better-ranked stocks in the same sector include Energizer Holdings, Inc. ENR sporting a Zacks Rank #1 (Strong Buy) as well as Constellation Brands, Inc. STZ and Newell Brands Inc. NWL each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Energizer Holdings as an average positive earnings surprise of 21.6% over the trailing four quarters and a long-term earnings growth rate of 10.1%.

Constellation Brands has an average positive earnings surprise of 11.7% for the past four quarters, with a long-term earnings growth rate of 18.2%.

Newell Brands generated an average positive earnings surprise of 7.7% over the trailing four quarters and a long-term earnings growth rate of 12.1%.

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