Constellation Brands ramps up hard seltzer capacity; increases push into ecommerce

By Rachel Arthur contact

- Last updated on GMT

Pic:getty/ipopba
Pic:getty/ipopba

Related tags: Constellation brands, hard seltzer, Us

As Constellation Brands plans for the year ahead, two fast-growing areas are at the top of its agenda: hard seltzers and ecommerce.

The beer, wine and spirits giant -  which is centered around brands such as Modelo Especial, Corona, Kim Crawford, Meiomi and The Prisoner – hopes to reap the results of being one of the early movers in Big Beer's push into hard seltzers, as well as the alcohol ecommerce sector.

This year it is doubling its hard seltzer capacity and launching a new product as it looks to grow its presence further in the category.

And with the pandemic pushing consumers towards ecommerce, Constellation says this will be a ‘meaningful pillar of growth’ for the company in the future.

New hard seltzer launch for 2021

The beer business remains Constellation Brands' biggest division and source of future growth - a business that remains 'extremely strong'. It is drawing on the brand equity of one of its biggest brands - Corona - with its hard seltzer launch in the US last spring.

The 4.5% ABV drink is maintaining its #4 position in the category, according to CEO Bill Newlands, with more to come in 2021.

“With the launch of only one SKU to date, Corona Hard Seltzer continues to exceed our expectations,” ​he said, speaking in the company's Q3 earnings call last week. “Early next fiscal year, we plan to launch Corona Hard Seltzer Variety Pack No. 2, which will offer consumers the same great Corona taste and refreshment attributes while expanding to new flavors: including pineapple, strawberry, raspberry and passion fruit.

“Variety Pack No. 2 will be followed shortly thereafter by the introduction of another exciting new hard seltzer initiative.

“We believe these product launches will help further strengthen our competitive position in the fast-growing hard seltzer category, broaden our distribution reach and enhance our market share in the high-end of the market.”

The hard seltzer category is jumping to the next level in the US with the introduction of products from the big players: Topo Chico from Coca-Cola/MolsonCoors; Bud Light Hard Seltzer from AB InBev and Vizzy from MolsonCoors, to name just a few. Corona Hard Seltzer is Constellation Brands’ big bet in the market – but not its only entrant.

Funky Buddha – the craft brewery Constellation acquired in 2017 – launched a hard seltzer that has performed ‘extraordinarily well’ in its Florida market, and Newlands says it will build on this success in 2021. Constellation also has a minority investment in PRESS – ‘which has also done extremely well’ in the category.

Early mover in alcohol ecommerce

Constellation Brands acquired DTC brand Empathy Wines​ in July last year: hoping not only to gain a growing brand but also eying up the opportunity to leverage the start-up’s digital capabilities across its wider wine and spirits portfolio.  

While an increasing number of consumers have turned to ecommerce over the pandemic, it is also heavily weighted towards the higher end of the wine category with wines priced $20+ making up nearly 90% of total DTC sales, notes Newlands.

“We are successfully driving our digital commerce initiatives which are gaining momentum,” ​he said.

“Since our acquisition of Empathy Wines, we have continued to make significant progress in leveraging their unique platform and capabilities across our portfolio within the DTC and three tier e-commerce space. We have launched several new DTC sites, leveraging the Empathy platform, including The Prisoner Wine Company, Double Diamond and Simi.

“We believe this category will be a meaningful pillar of growth for Constellation in the future. In fact, our wine 'Power Brands' competing in the e-commerce space are outpacing the overall wine category as our early investment in the category is providing us with a meaningful first-mover advantage.

“During the quarter, we became the first CPG company to partner with Instacart to feature our products on Facebook ads, propelling Constellation to the next level of three tier e-commerce media by enabling us to refine and optimize our ad creative and targeting based on real-time data.”

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