What's going on?

Molson Coors� stock price fell flat on Wednesday after America�s third largest beer maker said its costs would rise more than expected� D’oh!

What does this mean?

Molson Coors� footprint expanded significantly last year when it bought the remaining 58% of MillerCoors that it didn�t already own from SABMiller for $12bn (it was formerly a joint venture). Following that huge acquisition, Molson Coors views this year as an �investment� year in which it�s spending money on things like marketing and distribution in order to, hopefully, boost its future sales. It turns out that it�s going to spend significantly more than investors were expecting � and, given the stock sold off almost 7% on Wednesday, they don�t seem to be the biggest fans!

Why should I care?

For markets: Ice� cold�. beer just ain�t what it used to be.

People are drinking more cocktails (note the big rise in tequila sales!) and alternatives like ros� wine, which millennials have, apparently, made popular. When beer is the choice, it�s now often a craft brew or one of the options from Mexico (like Corona) rather than the go-to brands of yesteryear (like Coors). The big players have tried to adapt by altering their offering (e.g. selling cider) and acquiring craft brewers � but if beer consumption doesn�t start increasing that might not be enough to overcome the challenge of our changing tastes.


The bigger picture: Investors tend to get nervous around execution risk.

Young people are consistently told to invest in themselves: go to college, take that job �for the experience�, learn a new skill etc. That will, supposedly, pay big dividends in the future. Yet when a company says that it�s going to spend more money preparing itself for a better future, investors often sell the stock as if investing in oneself is the craziest idea they�ve ever heard. Sometimes, this is justified: the company�s plan may be a bad one. But the fears of execution risk are often overdone.