Coors Hard Seltzer pulled (TAP)
Molson Coors announced that it would cease production of Coors Seltzer. Wholesalers were asked to sell through their remaining inventory, and retailers were asked to shift the shelf space to the company’s other hard seltzer offerings. The company noted that beer-branded seltzers had struggled recently while Vizzy Hard Seltzer and Topo Chico have had success. Molson Coors noted that Bud Light seltzer declined 5.2% and Corona Hard Seltzer has declined 26.1% in the four-week period ended June 27 while Vizzy has grown 66%. Molson Coors’ target is to reach a 10% share of the hard seltzer category by year-end. It ended 2020 with nearly 4% share and was at 6% share mid-way through 2021. Molson Coors believes the beer-branded seltzers are at a competitive disadvantage. Molson Coors will continue to produce Coors Seltzer in Canada, where it has a 3.7% share and is the 6th in market share. Molson Coors has been quick to pull the plug on disappointing launches. Saint Archer Gold (Molson Coors’ answer to Michelob Ultra) was pulled in July 2020 after its launch during the Super Bowl. We applaud the quick decision-making to refocus on what is working. The shakeout in hard seltzer is likely just starting, considering the number of launches in the category in the past two years.
New seltzer-like products continue to launch (SAM)
Approvals for new seltzer and seltzer-like products continue to accelerate this year, as seen in the chart below. In 2021, new approvals have been trending at 334 per month compared to 228 approvals per month last year. The Tax and Trade Bureau (TTB) has already approved more labels in 2021 (2,741) than during all of 2020 (2,002). Most of the new labels are spirits-based products. Vodka-based products are the leading base spirit of new approvals at 562 this year, with whisky/bourbon second with 346. The most common flavor is lime at just over 300, with fruit flavors in second with 205. Last year we saw several beer brands launch hard seltzer drinks. This year, we see the same trend in spirits with Absolut, Bacardi, Captain Morgan, Casamigos, Jose Cuervo, Crown Royal, etc., launching RTDs. The line between hard seltzers and RTDs have been blurred, and many consumers are likely not aware of the differences. Consumers have been attracted to innovation in the category and have been trialing myriad new products.
Large winery goes private (MO)
On Friday, Altria announced the sale of Ste. Michelle Wine Estates to Sycamore for $1.2B, representing roughly 2x sales. Ste. Michelle Wine Estates claims to be the third-largest wine company with nearly 30,000 acres in Washington, Oregon, and California. Altria acquired the winery when it purchased U.S. Tobacco in 2008. Ste. Michelle Wine Estates had been part of U.S. Tobacco since 1974. The company accounts for about 60% of all Washington wine sales (the second-largest wine state). Sales declined $2M in 2019, and an operating profit of $50M in 2018 was a $3M loss in 2019. In 2020 revenue fell 10.9% to $614M while case volumes declined 12%. The company’s largest channel was grocery stores and bottle shops, but the declines on-premise were greater than the boost in retail sales. In Q1, revenue rebounded 2.7%. David Dearie joined Ste. Michelle Wine in October as the new President and CEO. Altria had been marketing the sale of Ste. Michelle Wine for some time, but it did not fit into the plans of Vintage Wine Estates, Duckhorn, and Constellation Brands. By not purchasing Ste. Michelle Wine Estates, E&J Gallo appears to be focused on low-priced bottles and the rapidly growing RTD business, while the three public wineries are focused on smaller, premium brands.
