Is Molson Coors (TAP) a Buy After a Landmark Sales Milestone from Madrí Excepcional?

The recent £1 billion annual sales milestone achieved by Molson Coors' Madrí Excepcional brand has sparked renewed interest in the company's stock. As the UK's second-largest world lager brand, Madrí Excepcional's success underscores the potential of premiumization and innovation in a sector grappling with structural headwinds. However, investors must weigh this progress against broader industry challenges, including declining consumption, macroeconomic pressures, and shifting consumer preferences.

Madrí Excepcional: A Beacon of Growth in a Deteriorating Sector

Madrí Excepcional's performance in 2025 is nothing short of remarkable. The brand generated £880 million in on-trade sales (a 5.4% year-on-year increase) and £140 million in retail sales (12% growth), with its alcohol-free variant contributing £1.5 million in its first six months. This success reflects Molson Coors' ability to tap into the UK's premium lager market, which is projected to grow at a 4.5% CAGR through 2035. By aligning with consumer demand for high-quality, flavorful products, Madrí Excepcional has become a rare bright spot in an otherwise soft beer industry.

The brand's growth is particularly significant given the broader context. The global beer market has faced declining consumption, driven by inflation, tariffs, and demographic shifts, particularly among lower-income and Hispanic demographics according to market analysis. Molson Coors' U.S. operations, for instance, reported a 2.3% decline in Q3 2025 net sales, compounded by a $3.65 billion goodwill impairment charge. Yet, Madrí Excepcional's performance demonstrates that strategic investments in premium and non-alcoholic categories can yield outsized returns.

Industry Headwinds and Strategic Responses

Despite Madrí Excepcional's success, the beer sector remains under pressure. Structural softness is evident in both developed and emerging markets, with U.S. beer volume declining for the 11th consecutive year in 2024. Molson Coors has responded by doubling down on its premiumization strategy, repositioning brands like Blue Moon and Peroni to capture higher-margin segments. The company has also expanded its non-alcoholic portfolio, including Peroni 0.0 and Blue Moon Non-Alcoholic, to align with the UK's 20% growth in no-alcohol beer sales in 2024.

However, these efforts come at a cost. The company's Q3 2025 results revealed a $3.65 billion non-cash goodwill impairment charge, reflecting the challenges of maintaining profitability in a shrinking market. While management maintains confidence in its long-term prospects-citing a healthy balance sheet and strong free cash flow-the stock has underperformed relative to peers, trading at a forward P/E of 8.22X. Analysts have adjusted their price targets downward, reflecting skepticism about the sustainability of Molson Coors' growth initiatives.

Valuation and Shareholder Returns: A Double-Edged Sword

Molson Coors' financial health remains a mixed picture. The company's focus on returning value to shareholders has been a silver lining: it repurchased $25 million in shares during Q3 2025 and maintains a dividend yield of 3.5%. These actions suggest management's commitment to preserving shareholder value amid declining sales. Yet, the recent impairment charges and revised full-year guidance-now expecting low single-digit net sales declines-highlight the fragility of the business model.

The undervaluation of the stock, as indicated by its low forward P/E, could appeal to contrarian investors. However, the company's reliance on premium and non-alcoholic segments to drive growth raises questions about scalability. While the global non-alcoholic beer market is forecasted to grow to $40 billion by 2030 according to industry reports, Molson Coors must contend with fierce competition from regional players and shifting consumer trends.

Conclusion: A Calculated Buy?

Molson Coors' Madrí Excepcional milestone is a testament to the power of innovation and premiumization in a stagnant industry. The brand's success in the UK and its expansion into non-alcoholic offerings position the company to capitalize on long-term trends. However, the broader beer sector's structural challenges-declining consumption, macroeconomic headwinds, and intense competition-pose significant risks.

For investors, the decision to buy TAP hinges on their risk tolerance and time horizon. The stock's undervaluation and robust shareholder returns make it an attractive option for long-term investors who believe in the company's ability to navigate industry headwinds. Yet, the recent financial setbacks and uncertain market dynamics suggest caution. Molson Coors' future will depend on its capacity to replicate Madrí Excepcional's success in other markets while mitigating the drag from its core U.S. operations.

In the end, TAP may be a buy for those willing to bet on a strategic pivot toward premiumization-but only if they're prepared for a bumpy ride.