The beer world is buzzing with change as industry titans AB InBev and Molson Coors pivot their strategies in response to dwindling beer sales and shifting consumer preferences. AB InBev is making waves with its rapid expansion into ready-to-drink (RTD) beverages, boasting impressive double-digit growth in canned cocktails, a bold move that contrasts sharply with Molson Coors’ decision to shutter the iconic 150-year-old Leinenkugel’s brewery, signaling a clear divergence between embracing new markets and consolidating existing ones in an era where traditional beer reigns supreme.
RTD Revolution: AB InBev’s Cocktail Strategy to Offset Beer Declines
AB InBev’s focus on ready-to-drink products reflects a view that this category is increasingly profitable. CEO Michel Doukeris highlighted on an earnings call that the “double-digit volume growth of canned cocktails like Cutwater and Nütrl” had helped offset declines in beer sales, illustrating the importance of diversification.
Addressing potential concerns about RTDs cannibalizing beer sales, Mr. Doukeris referenced Circana data during a recent earnings call. This data suggested that 75% of Cutwater and Nütrl sales were occurring alongside spirits and wine purchases, rather than displacing beer sales, indicating market expansion rather than substitution for these products.
Legacy Lost? Molson Coors’ Closure of the Leinenkugel Brewery
Meanwhile, another major player in the brewing industry, Molson Coors, has also undertaken significant structural changes, including the closure of a historic brewery. The company is closing the 150-year-old Leinenkugel’s brewery located in Chippewa Falls, Wisconsin.
Molson Coors announced its plan in November to close the historic Leinenkugel’s brewery in January, relocating its operations to their Milwaukee plant, a decision that unfortunately marks the end of an era for 56 dedicated employees who recently worked their last shifts.
The closure decision has reportedly been met with disappointment from the local community and even the family who founded the brewery. Brothers Jake and Dick Leinenkugel, representing the sixth generation of the family that established the brewery in 1867, have expressed a desire to buy the facility back and keep it operational.
The brothers have indicated that their proposals to repurchase the brewery have so far been ignored by Molson Coors. Dick Leinenkugel stated, “We would like to restore brewing operations at the Chippewa Falls site,” expressing hope for reconsideration from the company.
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Family vs. Corporation: The Battle to Save Leinenkugel’s
According to reports, a formal request from the Leinenkugel brothers to initiate negotiations was submitted earlier this month but was met with a denial on January 6, and despite a follow-up plea two days later emphasizing their commitment to preserving the brewery’s cherished legacy, Molson Coors had yet to respond as of recent updates.
Molson Coors has stated its intention to keep certain parts of the site open. The Leinie Lodge visitor center, gift shop, and a small pilot brewery are expected to remain operational, while the fate of the larger production facility remains unclear.
Dick Leinenkugel has expressed that should the family succeed in buying back the brewery, it would operate as an independent company, possibly introducing a fresh brand for beer enthusiasts, and he noted that this new venture “may or may not be brewed under the Leinenkugel’s name.”
As the brewery prepared for its final day of operation, the Leinenkugel family remained hopeful about reclaiming ownership and continuing the site’s legacy, with Dick Leinenkugel highlighting the profound significance the brewery holds for the Chippewa Valley community.
Molson Coors, the second-largest brewing company in the U.S., cited shifting its beer manufacturing to its Milwaukee plant as the primary reason for the decision. The company, which also produces well-known brands like Coors Light, Miller Lite, and Carling, described the closure as a difficult but necessary choice.
The closure of the 150-year-old brewery comes amidst reports of a sharp slump in overall beer sales impacting the company. Molson Coors CEO Gavin Hattersley had previously indicated that cost-cutting efforts would be necessary to navigate the challenging market conditions.
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The company’s financial results reflected these difficulties, with Molson Coors reporting a 7.3 percent decline in sales during the second quarter of the previous year. The company had also implemented price increases earlier in 2024, which can sometimes impact consumer demand.
Brian Erhardt, Molson Coors’ chief supply chain officer, provided context for the decision to Food Dive. He stated, “‘While never easy, these choices are made with much thought and consideration to position Molson Coors for continued success in Wisconsin and beyond.’
Mr. Erhardt elaborated on the company’s strategic reasoning, explaining, ‘Following the end of a large contract brewing agreement and amid an ongoing canning line investment project at our Milwaukee brewery, we’ve made the decision to close two of our smaller brewing operations in Wisconsin and centralize statewide production at our main site in Milwaukee.’ It appears the Chippewa Falls facility is among these smaller operations slated for consolidation.
The significant shifts occurring within major brewing companies like AB InBev and Molson Coors are reflective of broader trends across the entire food and beverage sector, where numerous businesses are recalibrating their production strategies in response to a challenging economic landscape characterized by persistent inflation and evolving consumer habits.
Recent examples from other sectors underscore this trend. In the last month alone, cereal giant WK Kellogg Co and beverage behemoth Keurig Dr Pepper have both announced the closures of production facilities. These actions have impacted hundreds of jobs across the respective companies, highlighting the widespread nature of the pressures.
More broadly, alcohol brands across categories have reportedly suffered as Americans have cut back on their drinking habits following the period of pandemic lockdowns. This shift in behavior has added to the demand-side challenges facing producers.
The wine industry is also feeling the effects of decreased alcohol consumption, as evidenced by Vintage Wine Estates, the 15th largest producer in the U.S., filing for bankruptcy in July with a direct mention of Americans drinking less as a key factor; shortly thereafter, Meier’s Winery, an affiliate of Vintage and one of the nation’s oldest wineries, also filed for bankruptcy, attributing its struggles to similar market disruptions.
As AB InBev and Molson Coors chart contrasting paths—one embracing RTD innovation, the other navigating historic closures—the brewing industry’s future hinges on adaptability. The survival of legacy brands and facilities now depends on balancing tradition with agility, whether through diversifying into RTDs or preserving heritage through community-led ownership. In an era of shifting consumer habits, the ability to blend innovation with respect for brewing legacy will define the industry’s next chapter.
