Molson Coors (TAP) has not only set its sights on exploiting the surging hard seltzer market, but is now making a push into CBD beverages in Canada and the U.S.
“In the U.S. we have brought CBD products to Colorado. We launched them this week. So it’s a little too soon to tell how they are going to do. But, we are using the same brand names as we are using in Canada, the product tastes really good,” Molson Coors CEO Gavin Hattersley told Yahoo Finance Live.
Molson Coors signed a joint venture deal some two years ago with cannabis producer Hexo. Since then, the duo has launched CBD beverages in Canada under the Truss brand. The debut of CBD products this week reflects an expanded deal between the two companies inked in April.
The U.S. CBD drinks market is expected to grow at a 17.8% compound annual growth rate through 2025 to $2.8 billion, according to Grand View Research. So it’s logical for Molson Coors to want a piece of that market, especially as consumers migrate away from full-calorie beer.
All in all, Molson Coors venturing into CBD shouldn’t be a big surprise to watchers of the Molson Coors story under Hattersley.
The company has pivoted into the hard seltzer market via launches under the Vizzy and Coors Seltzer brands. In early 2021, the company will distribute Topo Chico hard seltzer amid a deal struck recently with Coca-Cola. Molson Coors plans to increase its hard seltzer production by 400% in 2021.
Coupled with improved marketing for Coors Light and Miller Lite that has led to a sales pop, Molson Coors has held up quite well this year even as the COVID-19 pandemic has walloped off-premise beer sales. Third quarter sales fell 3.1% from a year ago, but core operating profits rose 1.4%.
“One year after CEO Gavin Hattersley announced his revitalization plan, the company has made respectable progress in several important areas. In terms of strengthening its iconic brands, Coors Light and Miller Lite are together capturing market share and growing mid- to high-single digits in U.S. retail channels. The company is expanding its above-premium portfolio through innovations and partnership in the U.S., Canada, and Europe, as well as in "beyond beer" categories such as cannabis and non-alcoholic beverages,” said Guggenheim beverage analyst Laurent Grandet in a note to clients.
Hattersley is realistic with the near-term outlook for beer being sold at bars as the pandemic rages on.
“I do think the on-premise [business] will come back. It’s going to take a long time to come back to pre-pandemic levels. It doesn’t matter what city for town you drive through in America, you will find a closed restaurant and a closed bar. Some of them are never going to come back,” Hattersley said.
In the meantime, we can all enjoy CBD beverages at home on Zoom.
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