Among the various effects of the coronavirus pandemic on global businesses, beverage companies have been on the look-out to expand their healthy beverages portfolios as consumers become more health conscious. Molson Coors Beverage Company TAP is one of the beverage behemoths that recently took to fend-off the pandemic-related uncertainties through the launch of drinks with healthy ingredients.
Notably, drinks containing vitamins, herbs, plants and minerals, with a potential health benefit, as well as probiotic-infused kombuchas, turmeric-based "golden milks" and high-energy teas are gaining popularity among consumers. This has been making the dice roll for the energy and functional drink market over the past few months.
Molson Coors’ Game Plan
With restaurants, bars and cinemas closing down due to the pandemic, on-premise sales, which form the majority of revenues of beverage companies, have taken a hit for most beverage makers, including Molson Coors. Moreover, travel restrictions have dealt a huge blow to the Travel Retail business.
However, Molson Coors has risen to the occasion to make notable innovation, well-poised to tap the growing demand for health drinks as consumers are looking to boost immunity and stay protected from the virus. Consequently, earlier this month, the company announced plans to expand beyond the beer aisle, with the launch of its non-alcoholic product line this fall.
Notably, the company renamed itself as Molson Coors Beverage Company in January 2020 to more precisely present its intent to expand beyond beer and into other growth adjacencies. Living up to this motive, it plans to launch four innovative non-alcoholic brands from its emerging growth division on the lines of health, wellness and social responsibility, in partnership with L.A. Libations.
The first of these brands to be launched is HUZZAH in the seltzer category this fall. The full-flavored seltzer will include probiotics to support a healthy gut, with lesser sugar and calorie content. The company plans to launch HUZZAH on the online platform DrinkHuzzah.com along with select retailers in South California. The brand will be launched in three flavors — Strawberry & Hibiscus, Juicy Pear, and Raspberry & Lemon.
Other brands lined up for launch under the plan are MadVine — a 100% plant-based diet soda with zero calories, sugar and artificial ingredients; and Golden Wing — a grain-based milk alternative made of top-quality barley and no additives, stabilizers or frothing agents, containing proteins and nutrients.
The company’s fourth line of non-alcoholic products is likely to be a nootropic performance beverage, which will provide enhanced focus and nutrition. It will also provide improved performance, without the troubles linked to high-caffeinated drinks for gamers and developers. This product is not yet formally announced by the company.
Additionally, on Sep 15, Molson Coors formed a joint venture with Pennsylvania-based D.G. Yuengling & Son Inc. to expand the latter’s brand reach to the West Coast. As part of the deal, the companies expect the Yuengling beer to be available in newer markets by the second half of 2021. Yuengling beer is currently distributed on the East Coast of the United States, across 22 states and New England. The partnership with Molson Coors will help expand the footprint of brands like Yuengling Traditional Lager, Black & Tan, and Flight in other states in the West Coast of the United States.
As part of the deal, Molson Coors will offer some of its breweries to brew and pack under the guidance of Yuengling brewers. The beers will be distributed into new markets, using Molson Coors’ large footprint, particularly in the Western United States. Molson Coors will gain from an expanded brand portfolio as well as increased exposure in Yuengling’s existing markets. The deal keeps the company on track with its initiatives to fortify its core of American lagers.
As part of its Revitalization plan announced last year, it has undertaken several deals to expand in the non-alcoholic beverage space, explore the cannabis market and take a share of the fast-growing hard seltzer demand. The company earlier launched non-alcoholic, cannabis-infused beverages through its joint venture with the HEXO Corp. for the Canada and Colorado markets.
These launches demonstrate its focus on gaining share in the non-alcoholic beverage space, while also expanding its existing portfolio of brands and reach. Notably, Molson Coors’ focus on premiumization and cost savings has been aiding its bottom-line performance. In fact, it has always been committed to growing its market share through innovation and premiumization.
The company’s shares have declined 7.8% in the past three months against the industry’s growth of 6.6%, mainly due to the disruptions in the on-premise business in the past few months. However, we believe the recently announced product launches are likely to propel its growth story in the upcoming months. The company currently sports Zacks Rank #1 (Strong Buy).
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The Boston Beer Company, Inc. SAM has been dominating the hard seltzer market with the Truly brand. Growth at Truly is led by the Truly Hard Lemonade, which is witnessing solid trends with the momentum likely to continue. It expects to continue investing heavily in the Truly brand to enhance the brand’s position in the hard seltzer category as competition continues to increase. The company sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Anheuser-Busch InBev SANV BUD has been benefiting from the near-beer trend, which gained momentum last year, through the introduction of various brands of no- and low-alcohol beer. Recently, the company introduced Budweiser Zero, with zero alcohol and zero sugar. Further, its Bud Light Seltzer and Bon & Viv are gaining from the growing demand for hard seltzers. The company currently carries a Zacks Rank #2 (Buy).
Monster Beverage Corporation MNST currently has a Zacks Rank #2. The company has been experiencing continued strength in its energy drinks category through its strong portfolio of brands. Further, its robust innovation and pipeline of product launches position it for growth.
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