Earnings Report Translated

Miller TimeThere is a little-known beta version of Google Translate that allows interested readers to learn what public earnings announcements really mean.  As a public service, I offer what some of this week’s announcement from SAB Miller (the beer people) actually discloses.

Headline: MillerCoors Weathers Tough First Quarter

Translation: We have to say we weathered it because there is no way to put a positive spin on what happened (so look out for the details).

Text: SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) reported that pricing and growth in sales of above premium brands at MillerCoors drove a 4.0 percent increase in domestic net revenue per barrel versus the same quarter in the prior year.  MillerCoors underlying net income declined 1.2 percent in the first quarter to $271.9 million versus the same quarter in the prior year.

Translation:  We know it isn’t much, but this is the best news we could come up with for the lead, which tells you everything you need to know about how we’re doing. We’re losing market share like crazy while craft brewers saw a 15 percent rise in volume and a 17 percent increase in dollar growth in 2012, representing a total barrel increase of almost 1.8 million.

Text: “Across the country, beer volumes were challenged in the first quarter due to a combination of tough comparatives led by last year’s unseasonably warm weather and the payroll tax increase that impacted our core beer drinkers’ disposable income,” said MillerCoors Chief Executive Officer Tom Long.

Translation: We’re hoping you won’t think it’s as bad as it looks.

Text:  “However, our portfolio transformation strategy is working as evidenced by our growth in domestic net revenue per barrel so there is reason for optimism as our strategy unfolds.  Our new brand launches, Redd’s Apple Ale and Third Shift, gained early traction with consumers and retailers ahead of our initial projections, and Tenth and Blake continues to deliver strong results led by Blue Moon.”

Translation: Consumers are racing to craft beers in droves because, despite the key tenet of our core strategy, apparently taste does matter to some beer drinkers.  Fortunately, our immense media budget — made possible by the lack of need for quality ingredients — has allowed us to gain some traction in selling our own fake craft beers. 

Text: MillerCoors Premium Light STRs decreased mid-single digits in the quarter. Coors Light declined low-single-digits in the quarter.  The brand continues to lead the premium light segment in share growth…

Translation: We’re losing ground like crazy, but at least we’re still in the lead…

Text: … through continued reinforcement of its “refreshment as cold as the Rockies” positioning in advertising, including several new “Explorers” TV spots, as well as through packaging innovation with the launch of the “World’s Most Refreshing Can” this month with several functional features that will drive consumer engagement. 

Translation: …because we’re great at marketing crap.

Text: Miller Lite declined high-single digits for the quarter. The “It’s Miller Time” campaign is well-positioned around camaraderie and is resonating emotionally with our consumers…

Translation: We hope you won’t notice this non-sequitur…

Text: …particularly within social media where Facebook followers have doubled since the launch of the program.

Translation: …and since we can’t show any substantive progress, we’ll point out that people are liking us on Facebook (even though we have to offer free beer to get them to do it — which fits perfectly with the Facebook business model).

Text: Tenth and Blake Beer Company grew the MillerCoors Craft and Import portfolio by high-single digits in the quarter, driven by Blue Moon Brewing Company and the continued national expansion of Batch 19. Blue Moon continued its strong growth, up high-single digits in the quarter.  Peroni Nastro Azzurro continued its growth, up low-single digits for the quarter.  Jacob Leinenkugel Brewing Company’s growth slowed to low-single digits for the quarter as the Summer Shandy brand was adversely affected by unseasonably warm weather in the prior year.

Translation: You can fool all the people some of the time and some of the people all the time.

Text: MillerCoors launched Redd’s Apple Ale and Third Shift nationally in the first quarter as it focused on creating innovative new products in the fast-growing, higher-margin segments of the beer industry.  Redd’s Apple Ale was launched with a Super Bowl TV ad in local markets across the country and we continue to market the brand aggressively to increase awareness. Third Shift debuted in March and was prominently advertised across the country during the March Madness men’s college basketball tournament.  Distribution and volume on both brands are incremental to our business as many consumers are new to the MillerCoors portfolio of brands.

Translation: Until craft beer drinkers actually taste it and a real craft beer (see here, for example), our fake craft beers have a shot at competing.

Text: The MillerCoors Economy portfolio declined mid-single digits in the quarter.  Miller High Life continued its veterans program and will kick off a partnership this month to celebrate the 110th anniversaries of two iconic American brands:  Miller High Life and Harley-Davidson.  Keystone Light continued to drive its “Always Smooth” positioning primarily through digital engagement and localized marketing efforts and introduced new packaging in late February.

Translation: We can’t even grow brands we’re practically giving away.  Oh, and if you can’t offer quality, wave the flag.

Text:  Built on a foundation of great beer brands and nearly 300 years of brewing heritage, MillerCoors continues the commitment of its founders to brew the highest quality beers.

Translation: We say stuff like this because we think we have to.  Maybe somebody’s fooled.

Text: MillerCoors builds its brands the right way through brewing quality, responsible marketing and sustainable environmental and community impact. 

Translation: There will always be a market for tasteless but smooth, especially if it’s cheap.

You’re welcome.


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