Molson Pushes Canned Coffee, Hard Seltzer in a Tough Beer Market

(Bloomberg) -- Molson Coors Beverage Co. is adding canned coffee to its distribution line-up as the drink giant races to diversify its business beyond beer.

The maker of Coors Light and Blue Moon said Thursday it will distribute La Colombe single-serving coffee in U.S. drug and convenience stores starting next year. The agreement -- the terms of which weren't disclosed -- marks the fourth non-beer partnership for Molson in as many weeks, signaling an accelerated effort to expand further outside the lagers the company's known for.

“You see the lines of various beverage companies continuing to blur, and I think you see consumers switching more than they ever have,” Pete Marino, the company's head of emerging growth, said in an interview. “We're in the first inning here in terms of expanding beyond beer; we are really just getting started.”

Earlier this week, Molson -- the country's second-largest brewer -- announced plans to manufacture and market Coca Cola Co.'s new hard seltzer version of Topo Chico in the U.S. That news followed an investment earlier this month in alkaline water ZenWTR, plus a slate of non-alcoholic beverages produced with L.A. Libations. Molson earlier this year announced a joint venture with HEXO Corp. to explore non-alcoholic CBD beverages.

Molson's strategy to grow into new product lines follows several years of shrinking revenues. In 2019, the company rebranded, dropping “Brewing” from its name, but that hasn't been enough to convince investors wary of a challenging U.S. beer market. Molson's share price is down about 38% this year, making it the second-worst performer in the S&P 500 consumer staples index, behind only Walgreens Boots Alliance Inc.

More recently, the coronavirus has shuttered stadiums and bars across the globe, leaving the near-term outlook for beer sales hazy.

The strategy is a necessary one in the rapidly shifting landscape of beverages, but it's not without risks, said Duncan Fox, senior consumer staples analyst at Bloomberg Intelligence. Moving investment away from the core beer business could leave Molson flat-footed if preferences move back to beer, much like they did following hard cider and spiked lemonade booms years ago.

“Beer sales in North America have been suffering for some time because people are probably trying different things,” he said. “There's a danger, of course, that these newfangled products don't go anywhere.”

Molson Coors is not alone in its efforts to diversify. Heineken NV launched its first hard seltzer in September and Anheuser-Busch InBev NV began exploring cannabis beverages back in 2018.

Molson's national distribution with La Colombe will nearly double the coffee brand's retail footprint in drug and convenience stores in the U.S. Molson will eventually expand distribution of the ready-to-drink coffee to other channels, it said in a statement.

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