The Molson Coors kombucha bet

Thursday, May 2, 2019 by Snacks
"_What do you mean, 'it's kombucha'?_"

"What do you mean, 'it's kombucha'?"

Yesterday’s Market Moves
Dow Jones
26,430 (-0.61%)
S&P 500
2,924 (-0.75%)
Nasdaq
8,050 (-0.57%)
Bitcoin
$5,298 (+0.32%)
10-Yr US Treasury
2.502%

Hey Snackers,

Spring break for central banks is over.

The Federal Reserve's 2-day policy retreat ended with one big (but expected) decision: It won't be changing interest rates. Markets dipped Wednesday as investors were hoping for a surprise rate cut.

Sip

1. Molson Coors falls 8% despite kombucha/canna-beer bets

Call a cab... Molson Coors' night is over after shares fell 7% following its earnings report. The volume of alcohol it sold dropped 4.7% worldwide — That's its 6th-straight quarterly decline. One small piece of dignity salvaged: Coors light showed "improvement."

Innovation cravings... Molson's feeling them. A highlight in the report was the brewer's goal to introduce non/low-alcohol drinks to 100% of its markets by 2025. Here's who's making moves:

  • Alt-Beer: "Arnold Palmer Spiked" is its new 5% ABV drink that enjoyed “rapid growth” last quarter (no word on what this "malt beverage" is actually spiked with).
  • Tap Ventures: Molson's venture capital arm already bought a California kombucha and invested in chai tea within the last year.
  • Cannabis drinks: Pot is legal in Canada, but the edibles laws are a bit hazy. So Molson confirmed its cannabis-infused drink lineup will arrive this fall once regulations get all cleared up.
THE TAKEAWAY

Beer is a shrinking market... Alcohol sales are slipping nationwide, but beer demand dropped the most (down 1.5% last year). Since the size of the liquid pie is shrinking, Molson's task of getting someone to drink their beer requires converting drinkers of the competition. Unfortunately, Bud spends a ton on beer advertising, and Corona has (almost) caught Coors in sales.

Cruise

2. Royal Caribbean jumps 7% on its pricing superpower

Extra shrimp cocktail... Royal Caribbean's profits popped 14% from last year to $250M during "wave season" (official industry jargon for Americans flocking south for winter). Tickets rose, on-board spending increased, and the share price closed in on a record high.

Man down... For the rest of the year, Royal's facing currents in both directions:

  • Bad & embarrassing: The "Grand Bahama Shipyard Incident of 2019." Two cranes dropped on docked ships during routine maintenance, canceling three "Oasis of the Seas" voyages.
  • Bad & out of its control: With the stronger US dollar, profits earned in euros (Royal runs German and Spanish cruisers) translate to fewer dollars. Plus, fuel prices rose.
  • Good & awesome: It's raising prices for beds on its ships (the ones with the folded towel origami animals) — Up 7.5%-9.5% across the board.
THE TAKEAWAY

Pricing power is a rare muscle... Royal is swole with it. It raised prices 7.2% last quarter, but passengers kept coming. That vacation splurging signals a strong economy, consumer confidence, and demand for the Royal treatment. Competitors like Carnival Cruises also rose Wednesday as Royal captains capitalize on price hikes.

Swipe

3. Square's many side-hustles killed profits

Square. A really sexy cash register... It looked more like a wad of street cash Wednesday. Shares fell 6% after Square reported a big loss and slowing revenue growth. Tough combo.

It's all over your money... Square launched with dongles to let farmers markets accept credit cards for beets. Then it evolved into sleek iPad-connected credit card swipers for your morning latte routine. But it's blown up into a whole financial services beast for small business. Now it's even curious about consumer finance:

  • 🏦 Square Capital: If your barbershop clippers broke so you need some cash, Square's there. It inked 70K loans last quarter worth $508M, up 50%.
  • 💻 Subscriptions: Its main money-maker. Barbershops can pay monthly for software to handle the accounting books.
  • 🤪 Cash App: Square Cash has been on top of Venmo in the App Store for a while, offering pretty much the same peer-to-peer payment app.
  • 🍤 Other bets: Well-bearded CEO Jack Dorsey (also CEO of Twitter) is hiring crypto engineers. And Square owns Caviar, the gourmet-endowed food delivery app.
THE TAKEAWAY

Square suddenly decided to do everything... Its stock rose from $12 at its 2015 IPO to $100 last fall, as it shockingly reached a profit (fast for a fast-growing tech company). But the stock has fallen as losses return. Those bets above show Square's big consumer and crypto ambitions. Reaching them costs $$$.

What else we’re Snackin’

  • Blame: Clorox falls 7%, claims a mild flu season hurt disinfecting wipes sales
  • Carbs: Yum Brands' rolled out delivery to 4K of its Taco Bell spots, but sales growth didn't impress
  • Perfumed: Estée Lauder's sales surge in Asia as artisanal scents take off #TomFordBlackOrchid
  • Splurge: GrubHub pops 7% after the CEO buys $1M of the stock
  • Streamed: Hulu reveals it's got 28M users (and it's launching a new binge-watch ad format)
  • Ticketed: Eventbrite plummets 30% to the lowest point since its IPO

Thursday

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