Above-Premium Beverage Diversification Will Unlock Future Value

Key Takeaways

• Diversification into premium, non-beer, and international segments supports higher margins, global growth, and resilience to shifting consumer preferences.
  
• Supply chain enhancements and strong cash flow enable cost mitigation, share buybacks, and investments in innovation, setting the stage for improved profitability and valuation.
  
• Persistent weakness in core markets, high input cost volatility, and lagging innovation in growth segments threaten Molson Coors' revenue, margin stability, and long-term growth potential.

Catalysts

Manufactures, markets, and sells beer and other malt beverage products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

• Molson Coors' expansion into above-premium and non-beer beverage categories (e.g., Fever-Tree mixers, seltzers, flavored malt beverages) positions it to capitalize on shifting consumer preferences for higher-quality, better-for-you, and non-alcoholic options, which should drive higher-margin revenue growth in future periods.
  
• Growth and premiumization in international segments-especially ongoing success of Madri and Peroni in EMEA/APAC and distribution runway for Banquet in the US-indicate strong potential for margin expansion and top-line growth as global urbanization and rising disposable incomes support higher long-term beverage consumption.
  
• Share retention gains, particularly in core brands like Coors Light, Miller Lite, and Banquet, plus expanded retail shelf space, set a foundation for stronger future sales as consumer sentiment rebounds and on-premise occasions continue to normalize post-pandemic.
  
• Investments in supply chain efficiency, productivity improvements, and cost optimization are expected to offset recent headwinds (e.g., aluminum costs, volume deleverage), positioning Molson Coors for EBITDA and net margin improvement as input costs normalize and contract brewing headwinds fade.
  
• Aggressive share repurchases and prudent capital investments, enabled by strong free cash flow, offer EPS growth and balance sheet flexibility to fund innovation and selective M&A-potentially leading to improved valuation multiples as secular demand and portfolio diversification trends play out.

Molson Coors Beverage Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Molson Coors Beverage's revenue will decrease by 0.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 9.2% today to 9.5% in 3 years time.
• Analysts expect earnings to reach $1.1 billion (and earnings per share of $5.99) by about August 2028, up from $1.0 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.7x on those 2028 earnings, up from 9.6x today. This future PE is lower than the current PE for the US Beverage industry at 25.3x.
• Analysts expect the number of shares outstanding to decline by 4.57% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Molson Coors Beverage Future Earnings Per Share Growth

Risks

• Sustained declines in U.S. beer industry volume-guidance reflects a continued 4–6% drop in the second half of 2025, with management acknowledging there are no signs yet of a turnaround in consumer confidence or consumption patterns. This persistent weakness directly pressures core revenues and creates ongoing operating deleverage.
  
• The company faces high input cost volatility, especially from unpredictable Midwest Premium aluminum pricing, which remains difficult and expensive to hedge and has spiked over 180% since January; this creates a major headwind for gross margins and threatens overall earnings predictability.
  
• Growing market exposure and reliance on mature U.S. and Canadian markets, with only incremental revenue contribution from international regions (EMEA and APAC), limits growth opportunities and magnifies risk from demographic shifts and declining beer consumption in developed markets, constraining long-term top-line growth.
  
• Despite premiumization efforts and innovation in non-alcoholic and above-premium segments, Molson Coors continues to under-index relative to peers in high-growth product categories (e.g., hard seltzers, RTDs, non-beer alternatives); lagging performance in these segments may stifle mix improvement necessary for margin resilience.
  
• Intensifying competitive and promotional pressure in core markets, ongoing pack and channel shifting, and potential regulatory/taxation actions add further risk to net sales, market share, and profitability, as evidenced by the company's need to reverse incentive compensation and reduce earnings expectations for 2025.

Valuation

• The analysts have a consensus price target of $55.919 for Molson Coors Beverage based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $75.0, and the most bearish reporting a price target of just $42.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $11.5 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 10.7x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of $50.21, the analyst price target of $55.92 is 10.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.