Mark Hunter had been running Molson Coors Brewing Co. for just six weeks, but the magnitude of his task became immediately clear during the company’s Feb. 10 conference call with analysts.
Transcripts of the call show that the CEO and his executive team used the word “headwinds” seven times. The terms “challenges” and “challenging” were uttered on nine occasions.
Behind the iconic corporate images of bubbling mountain streams and blue skies, turbulence faces the Denver-based brewing giant.
Craft-beer purveyors up and down the Front Range are reporting double-digit percentage gains in production and sales.
Yet traditional beer barons are grappling with flat or declining demand as consumers increasingly gravitate toward craft beers, wines and spirits.
Major domestic brewers have seen sales of mainstream and light brands fall by an annual average of 1.7 percent over the past decade.
The trend is not lost on Hunter, a 26-year veteran of the beer business, mostly in Europe. He assumed the Molson Coors helm on Jan. 1, replacing the retiring Peter Swinburn.
Hunter, a 52-year-old Scotsman, sees his mission as twofold: preserving the stature of flagship brands such as Coors Light, Miller Lite and Molson Canadian in domestic and international markets, while simultaneously capitalizing on the popularity of fuller-flavored craft styles.
Hunter declines to engage in the spirited debate on the definition of craft beer and whether the offerings from mass-market brewers are indeed craft, or simply “crafty,” in the parlance of critics.
But Hunter is quick to note that the popular Blue Moon line — considered craft or craftlike in some circles — was introduced by Coors Brewing Co. in 1995, long before many craft brewmasters had legally sipped their first beers.
“We’ve been helping shape (the craft segment) for the last 20 years,” Hunter said. That segment will be an increasing point of emphasis.
Molson Coors has “demonstrated a desire to look at craft acquisitions,” he said. “A function of our business is responding to the needs and preferences of our consumers. It’s our responsibility to help shape those changing tastes.”
Aside from keeping the doors open to acquisition, the company routinely makes additions to its internal portfolio of craft beers. Some of them originate from AC Golden — a boutique brewery ensconced in the massive MillerCoors plant in Golden. Others are concocted at The Sandlot brewery at Coors Field.
Hunter also sees potential in the small but growing field of hard cider.
Molson Coors Brewing Co. was born of the 2004 merger between Golden-based Adolph Coors Co., founded in 1873, and Molson Inc., which began in Montreal in 1786.
In 2007, Molson Coors agreed to combine its U.S. operations with SABMiller in a deal to form MillerCoors LLC, now based in Chicago. Molson Coors and SABMiller have equal voting stakes in the venture. Profits are allocated 58 percent to SABMiller and 42 percent to Molson Coors.
In February, Molson Coors reported a 31 percent decline in fourth-quarter profit — $94.1 million compared with $137 million a year earlier — and net sales fell 5.3 percent to $973.8 million.
The company attributed part of the income decline to foreign currency losses resulting from the strong U.S. dollar.
“Both the fourth quarter and the full year were disappointing for them,” said Dan Wood, a brewing industry analyst with Chicago-based Morningstar. “They had currency headwinds, in addition to declining demand.”
On the plus side for investors, Molson Coors recently announced a $1 billion stock repurchase program and increased its dividend from 37 cents a share to 41 cents. Shares of Molson Coors have ranged from $57 to $78 over the past year. The stock closed Thursday at $75.40. The market was closed for Good Friday.
Wood said Molson Coors is prudent to focus on growing its craft portfolio, even though craft sales are small compared with the brewer’s mainstream brands.
“I think they’ll have some success with their craft portfolio,” he said. “They can buy successful names, and they have good performance with their existing (craft) brands.
“On the other hand, with their domestic brands, that’s going to be tough. They have had a hard time getting Miller, Molson and Coors to all grow at the same time. Getting all their brands to show good performance has been a challenge for them.”
Hunter said he’s confident in the mass-market appeal of the brewer’s flagship lineup of lighter-style beers, even in the face of craft competition.
“They’re fantastic for a delivery of refreshment,” he said. “They’re a great antidote to the increasing bitterness of beers.”
Resurrecting the brands’ growth, he said, starts with the fundamentals of a strong sales force to serve commercial customers.
“The measure of success is the number of feet you have on the ground, pub by pub,” Hunter said. “Instilling universal (sales) protocols is a big priority for us.”
And dealing with the oft-mentioned headwinds and challenges? That’s nothing new for Hunter, who has worked through industry cycles in Europe and North America.
“In terms of stamina and resilience and leading through tough times,” he said, “I think I’ve earned my stripes.”
Steve Raabe: 303-954-1948, sraabe@denverpost.com or twitter.com/steveraabedp
Mark hunter
Title: CEO, Molson Coors Brewing Co.
Age: 52
Salary: $1 million, plus potential bonus and stock options
Favorite suds: Coors Banquet in North America; Carling and Staropramen in Europe
Residence: Cherry Creek North
Wheels: BMW X5
Music: Eclectic tastes, with focus on new wave and punk
Recent vacation: Barbados
Reading: John Grisham’s “Gray Mountain”
Hobbies: Music, travel, skiing and golf
