Q2 2025 Earnings Summary
- Achieved $300 million cost savings target ahead of schedule, driving significant margin expansion in the Beer business, which allows for reinvestment in increased marketing efforts to support growth.
- Despite short-term challenges, the company remains optimistic about the second half of the year, with buy rates up mid-single digits over 52 weeks, and recent trends improving.
- Secured double-digit share gains in shelf space during spring resets, and plans to double down on increased marketing investments to leverage these gains and drive growth in the rest of the year.
- Significant impairment in the Wine and Spirits division, with fair value reduced from $3 billion to $500 million, indicating substantial loss in value.
- Beer depletion growth has slowed due to higher unemployment in key Hispanic markets and macroeconomic headwinds, potentially impacting future sales.
- Increasing marketing expenses are necessary to maintain brand performance, potentially pressuring margins in the coming quarters.
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Wine & Spirits Impairment
Q: Why the dramatic impairment in Wine & Spirits value?
A: The fair value of our Wine & Spirits business was reduced from $3 billion to $500 million due to accounting requirements based on future business assumptions. It's a non-cash adjustment and doesn't change our strategic outlook. -
Beer Depletions & Outlook
Q: Why were beer depletions softer, and what's the outlook?
A: Softer beer depletions in Q2 were due to higher unemployment in the Hispanic market, affecting 50% of our volume. We view this as a near-term issue, with strong demand trends picking up in recent weeks . We remain optimistic for the back half of the year. -
Corona Brand Performance
Q: What's happening with Corona's weaker performance?
A: Corona was slightly softer in Q2 due to macro factors and challenges in Eastern markets. However, we're seeing improvements in recent data and anticipate growth with the launch of Corona Sunbrew. Corona will benefit from increased marketing spend in H2. -
Increased Marketing Investment
Q: What's new with your marketing spend?
A: We've decided to invest significantly more in our brands like Corona, Modelo Chelada, and Pacifico. Thanks to cost efficiencies, we're boosting marketing in H2 to capitalize on opportunities when others may be pulling back. -
Share Repurchases
Q: Will you repurchase shares more aggressively now?
A: We accelerated share repurchases in Q2, buying back $249 million, totaling nearly $450 million in H1. With $2.2 billion in remaining authorization, we'll continue to be opportunistic. -
Shipments vs. Depletions Timing
Q: How will shipment and depletion timing reverse?
A: Shipments exceeded depletions in Q2 due to inventory builds. In Q3, shipments will be lower than depletions due to maintenance, reversing the trend. For the full year, they should align. -
Beer Gross Margins
Q: How should we think about beer gross margins ahead?
A: We've achieved our $300 million cost savings target. In H2, we'll continue to benefit but expect lower margins due to seasonal volume and higher marketing spend, especially in Q3. -
Shelf Space Gains
Q: Have distribution gains met expectations?
A: Yes, we had double-digit share gains in spring resets. Combined with increased marketing, these gains are beneficial, especially as competitors pull back. -
Wine & Spirits Turnaround Strategy
Q: Do you plan more acquisitions to turn around Wine & Spirits?
A: No, we're focusing on improving operational performance. We expect sequential improvements in H2 based on efforts made in H1.