1st BATCH OF FILES AVAILABLE NOW!

A new era begins today for Molson Coors, as Rahul Goyal takes over as ceo from longtime leader Gavin Hattersley. "Now is the time to create the next phase of growth," Rahul said in an upbeat video message as MC announced he got the job. In video, Rahul also committed to "grow our core power brands, above-premium portfolio and scale our beyond beer business." He pledged to be as "transparent as possible in laying out my vision ahead while we continue on our journey to be a total beverage company." That journey is one key to how Rahul rose from relative obscurity to the top job at a huge public company. But this yr MC not growing. In a note to distribs on his first day, Rahul acknowledged "reality" that co's "meaningful progress" is "not enough. We must transform faster, we must make changes that acknowledge the real challenges facing our industry" (including "softer-than-expected" industry and "rising cost pressure") and "we must address them with a sense of urgency." In that spirit, Rahul will likely look to hit ground running and begin to lay out this future on Nov 4 when Molson Coors reports 3d qtr results.Rahul's Remarkable Rise Rahul has been with the company for 24 years in roles of increasing responsibility across IT, finance and strategy. He started as a group manager on the IT side of the business with Coors Brewing. He became veep of information technology for Molson Coors in the UK by the time he was 30. A few years later, he took on cfo job for Molson Coors Cobra venture in India. Then he moved to the strategy side for several years, becoming Molson Coors' chief strategy officer in Nov 2019, just a couple mos after Gavin became ceo. Rahul clearly worked closely with Gavin on the co's strategic transformation into the Molson Coors Beverage Co. Indeed, MC release credited Rahul with "building successful partnerships" with Coca-Cola and Fever-Tree and "leading the acquisitions of Zoa and Naked Life." (Editor's note: that's the first time MC's referred to Naked Life as an "acquisition" in public comments.)Molson Coors Board Chose Rahul After 5-Mo Search MC board chose Rahul unanimously after a 5-month search. That's shorter than many big co ceo searches and significantly shorter than protracted 8-mo search when Gavin became interim ceo of MillerCoors a decade ago. While Molson and Coors families reportedly didn't agree at every point, they coalesced around Rahul as the best choice for co moving forward. MC interviewed external candidates, but ultimately chose an exec who knows the company's capabilities and challenges inside and out. Yet Rahul also represents change as he led the company in fresh directions, especially in M&A and embracing its new identity as the Molson Coors Beverage Co. This is a big leap in responsibility for Rahul, who's mostly served as an inside guy. He's now leading a huge public co with over $11 bil in revs and 17K employees. His letter to distribs and to employees on day one shows him leaning into the public-facing nature of new role.Timing of Announcement Many asked why MC didn't announce Rahul as ceo at its distributor convention the week before. One reason likely revolves around reporting requirements of the SEC (US govt) about selective disclosure. Fair Disclosure mandates that when "material non-public" info is made available to one group it must be made public to all. So it would have had to be a big public announcement that could have become the focal point of the meeting rather than MC's commercial plans. Another factor could have been that every "i" might not have been dotted or "t" crossed on official documents when MC had to make the call. And there could also have been other factors at play.Molson Coors Stock Down 25% for 6 Mos; US Shipments Down 7.7% Thru Jun; Downward Revisions Rahul becomes ceo during an especially difficult yr for Molson Coors. TAP stock price is down 21% yr-to-date and 25% in last 6 mos (even while S&P up 18%). Its US shipments down estimated 7.7% in first half, with the 3d qtr expected down double digits. Co revised guidance downward twice this yr, now expecting earnings to decline 12-15% in 2025. Molson Coors stock market capitalization is under $9 bil, with debt level of about $5 bil. But it still has strong profitability; EBITDA in 2024 was a robust $2.5 bil, perhaps $2.2 bil this yr. That means its enterprise value only about 6-7x EBITDA. Heineken just paid 11.7x EBITDA for rest of FIFCO beer/bev biz excluding US (see below). TAP stock less than half of peak, and volume down by over one-third since 2008. Rahul's work is cut out for him.More Deals Are Likely Coming With beer biz not growing, MC at a low debt to EBITDA level (roughly 2x), M&A as a core competence of Rahul's, especially beyond beer, it's reasonable to expect more deals coming. MC's Fever-Tree deal well received so far. MC distribs clearly want co to play in spirits RTDs and acquisition much more likely than building new-to-the-world brands. While INSIGHTS frequently hears rumblings about MC deal possibilities, will be interesting to see how MC M&A strategy unfolds."Strategic Positive," "Makes Sense" Say Analysts, Expecting "Bolt-on M&A" Analysts called appointment of Rahul "a strategic positive" (Goldman Sachs' Bonnie Herzog) that is also a "safe choice" that "makes sense" (Needham's Gerald Pascarelli). "He has been a driving force behind many of the company's most successful recent ventures," said Bonnie. Now that mgt has "healthier" balance sheet and "strong free cash flow," it also has "more optionality to invest in its business." Both looked for more "bolt-on M&A transactions."

Rahul Goyal Starts as MC CEO Today; TAP's Continuity, Change and Challenges; "Transform Faster"

Publishing Info