BUSINESS

Molson Brand ‘At Risk,' Company Says In Report

11/14/2013 03:57 EST
CP

The Molson brand may not be as valuable as thought, and is “at risk” of being written down, Molson-Coors said in its latest earnings report.

Buried deep in the report, released last week and first flagged by the Wall Street Journal, was a declaration that the company’s Canadian division, which makes Molson beer lines, was close to failing a test that would require the company to write down its value.

Molson-Coors blamed “competitive pressures and challenging macroeconomic conditions in the Canada market” for the brand's underperformance.

But the report noted that the Canadian division “marginally” improved its numbers from the prior year, mostly due to cost-cutting.

Molson-Coors is the world’s seventh-largest brewer. The company was created in 2005 when Colorado-based Coors bought Montreal-based Molson for $4 billion.

Molson-Coors’ books show the company values Molson at $2.9 billion, or $1.1 billion less than it paid for it eight years ago, the Journal reports, though that may be due to the "premium" Coors paid for the Canadian brewer.

Statistics Canada data from earlier this year shows that beer’s share of the alcohol business is in decline. Beer accounted for 44 per cent of alcohol sales in Canada in 2012, down from 50 per cent in 2002.

But the industry remains important to Canada’s economy. A recent Conference Board of Canada report found that one in every 100 jobs in Canada is directly or indirectly related to the beer business.

For every dollar Canadian households spend on beer, $1.12 is generated in economic activity, the report found.

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