In the tough economy, people are buying less Coors beer. Molson Coors Brewing Co. said Tuesday weak sales hurt quarterly profits, citing weak economic conditions, sentiment that was underscored hours later when the U.S. Commerce Department released figures show consumer gains combined with rising fuel costs prompted Americans to pinch dollars more tightly -- and beer was apparently one of the items cut.
The makers of Coors Light, Molson Canadian and Blue Moon said net income dropped in the company's second quarter as sales from beer wholesalers to retailers dropped 2.7 in the U.S.
The company cited weak economic conditions for the drop in sales, also noting that company profits were hurt by higher ingredient costs as commodities have been on the rise.
Molson Coors Brewing Co. reported a 6 percent decline in second-quarter profit as worldwide beer volume dropped 2.8 percent.
The company's results were in sync with the Commerce Department report, which showed consumer purchases dropped 0.2 percent in June after a 0.1 percent gain in May. Economists had expected June results to equal May's, so the spending drop came as a surprise.
"Consumers ended the quarter on a pretty poor note," said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston in an interview with Bloomberg. "The third quarter is looking very soft too. Consumers are facing lackluster wage growth in this phase of still-high gas prices."
Americans did increase savings in the quarter, but economists view that as a sign of uncertainty about the economy. The savings rate climbed to 5.4 percent, the highest since September.