Coca-Cola partnering with beer makers
In the beer industry, there is a truth that has been ignored for years: traditional beer consumption in the United States has been declining.
With the meteoric expansion of craft (independent) beer, flavored malt beverages, and hard seltzers, this has been masked in certain corporate data.
The recent Molson Coors quarterly financial report showed sales increase for the first time in almost a decade, but that came at the expense of Miller Lite and Coors Light volume, which continued to lose ground, albeit at a slight loss.
Large breweries have tried to fight this loss by innovation, mergers and acquisitions, and just imitating anyone who comes up with a product that sells well.
Anheuser-Busch/InBev, the world's largest brewer, has employed these tactics to maintain a roughly 50% market share, despite the fact that its key brands are losing volume. The introduction of Bud Light seltzers, the purchase of brands such as Rolling Rock and Modelo, and the acquisition of independent breweries such as Goose Island, Platform, Kona Brewing, and Breckenridge have all aided A-B/domestic InBev's and international growth.
When investors and organizations sense growth, they are likely to jump on the bandwagon in order to capture part of those profits.
Anheuser-Busch/InBev, the world's largest brewer, has used these techniques to maintain an almost monopolistic position.
The hard seltzer explosion is the most recent example of this. When the category burst into a multi-billion-dollar segment of the beer industry just five years ago, there were a number of tiny brands entering the market, and most were still trying to discover the correct brewing and flavor processes. Non-traditional alcoholic beverage companies are now attempting to cash in on new alcoholic offerings, seeing this as a fresh opportunity.
Coca-Cola is perhaps the most aggressive of these. In the past, the soft drink titan dabbled in alcoholic beverages. Coca-Cola bought the Sterling and Monterey wineries in California, as well as Taylor Wine Co. in New York, in 1978. This portion of the business lasted only a few years, and by 1982, Coca-Cola had exited the wine industry.
Coca-Cola has been collaborating with Molson Coors to make alcoholic versions of some of its soft drink brands in the last two years. Topo Chico Hard Seltzer was the first to hit the shelves in 2021. According to IRI Data, Topo Chico held 2.4 percent of the hard seltzer market in October 2021 with only a limited launch in 16 regions.
Molson Coors and Coca-Cola have teamed up to create Simply Spiked Lemonade, which will be available shortly in four varieties (lemon, strawberry, blueberry, and watermelon) in a variety pack.
Coca-Cola has also teamed up with Constellation Brands (the US importer of Modelo and Corona seltzers) to launch a range of ready-to-drink cocktails made with hard spirits under the Fresca brand, which is owned by Coca-Cola. As of now, the entire breadth of the information has not been made public.
Monster Beverage's $330 million purchase of Canarchy Craft Brewery Collective is another method Coca-Cola has entered the beer sector. This is the energy company's first foray into the alcoholic beverage sector. Monster Beverage is owned by Coca-Cola, which owns 16.7% of the company.
With other traditionally non-alcoholic beverage companies launching new alcoholic beverage brands, such as PepsiCo's Hard Mountain Dew (currently only available in Florida, Tennessee, and Iowa) and Rockstar Energy (also owned by PepsiCo) rumored to be exploring beer and FMB options (trademarks were secured in the summer of 2021), it appears that the lines between the beer, spirits, and non-alcoholic beverage industries will become even more blurred in the years ahead.