‘Biggest transformation’: Molson expanding hard seltzer production as Canada plays catch up to U.S. market

Boosting production of hard seltzer at Canadian operations by 300 per cent

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Molson Coors Beverage Co. said it will boost production of hard seltzer at its Canadian operations by 300 per cent, accelerating its push into the market for a drink that has become popular everywhere from frat houses to office socials.

“This is not something that is the flavour of the day,” Fred Landtmeter, Molson’s Canada CEO, said in an exclusive interview. “It’s part of what I’m qualifying as the biggest transformation that Molson Coors has gone through,” he added. “I’m not exaggerating when I say that.”

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Beer companies are increasingly jumping on the hard seltzer bandwagon after the trendy beverage delivered breakout success south of the border. Popular brands such as White Claw — developed by Anthony von Mandl, the Canadian who invented Mike’s Hard Lemonade — have turned the ready-to-drink category into an important market. The segment was worth US$2 billion in 2019, up from merely US$3 million in 2015, according to Euromonitor.

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The expansion is part of Molson’s quest to redefine itself as a beverage company rather than a brewing company. This “innovation journey,” as Landtmeter calls it, is part of an already announced $100-million investment to bolster its seltzer operations. Molson, which has been making beer from a base in Montreal since 1786, already has a joint stake with cannabis producer Hexo Corp. in Truss Beverage Co., a weed-infused drink maker.

Cartons of White Claw in New York City.
Cartons of White Claw in New York City. Photo by Timothy A. Clary/AFP via Getty Images files

On top of that, it could expand the seltzer product line. Currently, it has Vizzy and Coors Seltzer, which have at least 4.5 per cent of alcohol, similar to most beers. But unlike beer, seltzer comes without the calories — less than 100 calories per 355-ml bottle compared with 150 to 350 calories in the typical can of beer.

Leading the unquenchable consumption are millennials and Gen Z’ers of drinking age, which marketers target for their healthy-living pursuits, data insights firm IRI reported. On its American cans, Vizzy boasts about its vitamin C and antioxidant content.

Molson Coors launched its seltzers regionally in March and sales have been growing at a double-digit rate, even while most bars and restaurants were closed because of the pandemic. (Landtmeter declined to share exact figures.)

“The magnitude of the transformation of our portfolio to a broader beverage portfolio, plus the (capital) investments we’re linking to it, there’s no comparison in the 235-year history of this company,” Landtmeter said.

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The popularity of a new alcoholic drink is coming at a good time for Molson Coors and its rivals. Beer consumption in Canada has been trending down for several years now, largely because of the growing wellness movement, and competition has been increasing from a growing number of local and regional craft brewers. Canada saw an eight per cent increase in the number of brewing facilities from 2019 to 2020. At the same time, the volume of consumption declined nearly three per cent.

However, Landtmeter is certain that none of this spells the death of beer, especially its foray into seltzer. “We would be very cautious of (products) that cannibalize beer too much,” he said. “We are going to continue to invest in our beer brands. No compromise there.”

Molson will focus on “incremental” shifts in the seltzer category, instead, and the CEO is looking forward to a post-pandemic re-opening that will boost sales at arenas, bars and other social activities.

Landtmeter takes hope from the U.S. and the U.K., which are already opening up large parts of “high-contact” sectors and seeing a boom in social drinking. “I can’t wait for the on-premise channel to reopen,” he said. “When I look at the situation that my colleagues are experiencing in the U.K. and United States, I think it’s a good indicator that good times are ahead of us.”

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Financial Post

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In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.


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