Coca-Cola partnering with beer makers

There is a truth in the beer industry that has been glossed over for years: American’s consumption of traditional beer offerings has been falling.

This has been hidden in some of the corporate numbers with the meteoric growth of craft (independent) beer, flavored malt beverages and hard seltzers.

The latest Molson Coors quarterly earnings report showed sales growth for the first time in over a decade, however, that was on the backs of Miller Lite and Coors Light volume still losing ground, albeit a narrow loss.

Large breweries have attempted to combat this loss with innovation, merger and acquisition and basic copying anyone else that finds a product with sales growth.

As the world’s largest brewer, Anheuser-Busch/InBev has used these tools to hold a nearly 50% market share, even as their core brands continue to slide in volume. Introduction of brands like Bud Light seltzers, purchases of brands like Rolling Rock and Modelo, and acquiring independent breweries like Goose Island, Platform, Kona Brewing, and Breckenridge have helped to keep A-B/InBev strong both domestically and globally.

Anytime investors and corporations see growth, there is sure to be a good deal of hopping on the bandwagon to lake some of those sales.

The most recent example of this is the hard seltzer boom. Just five years ago, there were a handful of small brands entering the market, most were still trying to find the right brewing and flavor techniques when the segment exploded into a multi-billion-dollar segment of the beer industry. Seeing this new opportunity, non-traditional alcoholic beverage companies are now trying to cash-in on new alcoholic offerings.

Perhaps the most aggressive of these is Coca-Cola. The soft drink behemoth has dipped its toe into alcohol in the past. In 1978, Coca-Cola purchased Sterling and Monterey wineries in California and Taylor Wine Co. in New York state. This side of the business only lasted a couple of years, and by 1982, Coca-Cola had divested itself of the wine business.

In the past two years, Coca-Cola has started to partner with Molson Coors to create alcoholic versions of some of their soft drink brands. The first to market was the introduction of Topo Chico Hard Seltzer in 2021. With only a limited rollout in 16 markets, Topo Chico had garnered 2.4% of the hard seltzer market according to IRI Data in October 2021. Coming soon, Molson Coors and Coca-Cola have collaborated using the Simply Juice name for Simply Spiked Lemonade, with 4 flavors (lemon, strawberry, blueberry and watermelon) in a variety pack.

Coca-Cola has also partnered with Constellation Brands (US. importer of Modelo and Corona seltzers) to create a line of ready-to-drink cocktails using hard spirits under the Coke-owned Fresca brand. The full extent of the details has not been released as this time.

Another way that Coca-Cola has engaged in the beer business is with Monster Beverage’s $330 million purchase of Canarchy Craft Brewery Collective. This is the first time the energy company has entered the alcohol beverage market. Coca-Cola owns a 16.7% share of Monster Beverage.

With other traditionally non-alcoholic beverage makers also starting new alcoholic beverage brands like PepsiCo launching Hard Mountain Dew (only available in Florida, Tennessee and Iowa at this time), and Rockstar Energy (also owned by PepsiCo) rumored to be exploring beer and FMB options (trademarks were secured in the summer of 2021), it looks likely that there will be even blurrier lines between the beer, spirits and non-alcoholic beverages industries in the years to come.

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