Coors
Industryweek 30381 Coor Light 1 0
Industryweek 30381 Coor Light 1 0
Industryweek 30381 Coor Light 1 0
Industryweek 30381 Coor Light 1 0
Industryweek 30381 Coor Light 1 0

Tariffs Are Buzzkill for US Beer Giant as Costs Jump

June 14, 2018
"I can’t just go to the shareholders and say, ‘You’re just going to have to accept my profit’s going to be $40 million less,’” said Gavin Hattersley, CEO of MillerCoors. “It doesn’t work that way.”

The Trump administration’s tariffs on aluminum imports are presenting the largest American-owned beer company with several options, none of them palatable.

Depending on how much the tariffs push up U.S. premiums on the metal, MillerCoors estimates a more than $40 million hit to its bottom line. To soften the blow, the maker of Miller Lite and Coors Light may have to cut back on investments, new hires, or other costs and expenses -- or even raise prices.

“I can’t just go to the shareholders and say, ‘You’re just going to have to accept my profit’s going to be $40 million less,’” said Gavin Hattersley, CEO of MillerCoors said in an interview on June 12. “It doesn’t work that way.”

The tough decisions that the  Molson Coors Brewing Co. division will have to make are also facing other domestic buyers of the lightweight metal used to make everything from cans to cars. While Commerce Secretary Wilbur Ross says tariffs won’t have a major impact on U.S. businesses, manufacturers beg to differ.

“It’s costing the American consumer,” Hattersley said. “It’s absolutely not what the president intended, in my view, but it’s a consequence of what he did.”

Molson Coors shares, little changed on June 14, are down 14% since Trump announced plans to slap a 10% tariff on foreign aluminum shipments and a 25% tax on steel imports on grounds of national security.

One of his least favored options would be raising beer prices. Market share would be “hammered” by just a 50-cent increase on a 12-pack, he said. Using less aluminum in cans or shifting more toward bottles don’t appear to be viable solutions.

With international producers selling a greater portion in glass, large domestic brewers are more impacted by the tariff, he said. Local craft brewers too are moving away from bottles and more toward cans.

“There are 6,000 small brewers out there that are seeing a shift into cans, which is going to dramatically increase their costs,” Hattersley said. “They can’t hedge like the big guys do. They’re forced to pay these outrageous Midwest premium increases, and their ability to change their business model is quite difficult.”

Hattersley was speaking from Milwaukee, where the company just spent tens of millions of dollars on a new plant. “I often wonder whether we would have done that if we had known about this.”

By Joe Deaux

Popular Sponsored Recommendations

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

Adopting an Open Ecosystem: The Way Forward for Frontline Operations

March 11, 2024
Today's manufacturing tech stack thrives on connectivity, integrating new and legacy players for a seamless operation - not on monolithic systems. Embrace the future of frontline...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!