The company already produces Henry’s Hard Sparkling Water – which has been booming with sales volume up 126.5% in 2019. But it says one brand is ‘simply not enough’ as it looks at the trajectory and opportunity in the category.
But Molson Coors is also pledging to fight a battle on two fronts: defending beers such as Coors Light and Miller Light while attacking on the seltzer side.
'Let's be clear: the seltzer category is here to stay'
Molson Coors is moving its portfolio beyond its core beer stronghold – changing its full name from ‘Molson Coors Brewing Company’ to ‘Molson Coors Beverage Company’ last month to reflect its intent.
And like other beer giants – among them Constellation Brands and AB InBev – it’s eyeing up the booming hard seltzer category as one of the areas for expansion. The IWSR predicts the volume of hard seltzers in the US is going to more than triple by 2023, while UBS puts a figure of $2.5bn on the category by 2021.
“We believe that the seltzer category is here to stay. Let's be clear about that," said Gavin Hattersley, CEO, speaking in the company's earnings call yesterday. "And Molson Coors plans to compete in this space aggressively: we are going to have a multi-pronged approach to attacking that space."
It will launch Vizzy next month: a 5% ABV hard seltzer in four fruit flavors. And the company champions its new seltzer as having a clear point of difference to the competition by ‘aiming squarely at the health and wellness trends fueling the food and beverage industry’.
It will use the acerola cherry – an antioxidant rich superfruit grown in the warm climates of California, Texas, Florida and Central and South America – containing roughly 30 times more vitamin C per cup than an orange. And it will make the claim ‘with antioxidant vitamin C from acerola superfruit’ on pack.
“Vizzy will be the first hard seltzer made with acerola cherry, which is a super fruit high in the antioxidant, vitamin C. And there's no reason to believe that this isn't going to resonate very well with consumers and particularly that 25 to 39-year-old male and female that choose to drink, but are looking for potentially better choices.”
Hattersley declined to give details of how much Molson Coors is investing in the brand and its launch (Corona is pumping $40m into the launch of its hard seltzer) but promises its hard seltzers will be supported by “a very robust campaign” with national TV, digital, social, out-of-home advertising and sampling occasions.
“This is going to be our biggest bet yet on the hard seltzer segment, which we think will reach a couple of billion dollars in sales this year. As far as the response from our distributors and retailers is concerned, we've had an excellent response. There is a lot of excitement and anticipation for this brand.”
Coors Light Seltzer? Miller Light Seltzer?
Unlike Constellation with Corona Hard Seltzer and AB InBev with Bud Light Seltzer, Molson Coors has chosen to use separate brands for its hard seltzers: rather than ride on the brand equity of an existing one. Asked if there was potential for a seltzer extension of its own core beer brands, Hattersley did not rule out the idea but said the company’s priority was to ensure a point of differentiation.
“Where we find a clear point of differentiation, we will drive into that in a meaningful way. Our current is Vizzy, which is what we're going to put a lot of time and effort behind.”
What to do about beer?
One of seltzers main competitors, however, is beer – with both beverages targeting a similar audience and occasions. This creates a tricky balance for big brewers to handle as they enter the category.
For Molson Coors, Coors Light and Miller Lite are potential brands at risk from the seltzer phenomenon.
Hattersley, however, points to the performance of Miller Lite and Coors Light throughout 2019 when the hard seltzer trend was exploding – Miller Lite gained its 21st consecutive quarter and grew sales-to-retail volume in Q4; while Coors Light gained segment share for the third straight quarter.
“And as a combination Miller Lite and Coors Light outperformed the combination of Bud Light, Michelob Ultra, and Michelob Ultra Gold in terms of industry share,” says Hattersley. “So, this notion that a lot of the seltzer volume is coming from premium light is not necessarily supported by the facts that are underlying the Miller Lite and Coors Light's performance.”
He pledges to put more effort and money behind such beer brands at the same time alongside the company’s push into seltzers.