Dive Brief:
- Coca-Cola is partnering with Constellation Brands, the brewer of Corona and other beers in the U.S., to launch ready-to-drink cocktails through its Fresca brand, the companies said Thursday. Terms of the deal were not disclosed.
- The new Fresca Mixed line is expected to launch this year, starting with cocktails using real spirits and inspired by recipes created by Fresca drinkers around the world. Constellation will produce, market and distribute the line.
- The debut of Fresca Mixed marks the latest entree by beverage giants such as Coca-Cola and PepsiCo beyond their core of water, sodas, sports drinks and teas into alcoholic beverages.
Dive Insight:
A year after making a big splash into alcohol, Coca-Cola is deepening its presence in the category through its partnership with Constellation.
Coca-Cola first teamed up with Molson Coors in 2020 to create Topo Chico Hard Seltzer, which hit U.S. shelves earlier last year in nine states. After a promising launch, Molson Coors announced it would roll out the beverage nationwide in 2022. PepsiCo and Sam Adams maker Boston Beer followed last summer with plans to launch a hard offering under the Mtn Dew brand expected to reach shelves in the next few months.
The initial success of Topo Chico undoubtedly gave Coca-Cola confidence to enter into another deal for one of its other brands: this time its Fresca sparkling flavored soda. The move further blurs the once distinct lines between alcohol and nonalcoholic companies who are moving into each other’s territory. AB InBev’s Anheuser-Busch last month said it would be introducing in January Bud Light-branded hard soda, available in four flavors: cherry cola, citrus, orange and classic cola.
Similar to the other deals announced between nonalcoholic companies and their booze-focused counterparts, bringing Constellation to the table allows Coca-Cola to benefit from a partner who is knowledgeable about navigating the complex distribution system across the U.S. for alcoholic beverages. A deeper presence into alcohol also could provide a much-needed revenue driver for these companies.
“There’s plenty of products hitting the market. In fact, there’s all-time high levels of innovation, but the Coke and Pepsi ballpark scale — what they’re looking for, what they call success — it’s fairly limited right now,” Nathan Greene, an analyst at Beverage Marketing Corporation, said last year. “Alcohol represents the greatest margin generation opportunity, even if it is with a partner, compared to various nonalcoholic products.”
Alcohol also creates another way for nonalcoholic beverage makers to get their products into the hands of additional consumers who have more options to chose from depending on their need or preference. In Coca-Cola’s case, a consumer could have a Coca-Cola with Coffee in the morning; a Diet Coke, Honest Tea or Powerade in the afternoon; and then a Fresca Mixed after work.
Fresca, used by consumers as a cocktail mixer, soft drink, and zero-calorie, zero-sugar sparkling soda, is experiencing a surge in popularity. It is currently the fastest-growing soft drink in Coca-Cola’s U.S. portfolio, the company said.
Constellation said the deal will allow the beer and spirits maker to further grow its premium portfolio by attracting new customers to its brands through more flavors, different alcohol bases and functional benefits.
“One of the core tenets of our innovation strategy is a belief in the power of extending strong and trusted brands in thoughtful ways to bring to market unique products that resonate with consumers,” Mallika Monteiro, Constellation’s chief growth officer, said in a statement.
Canned cocktails, including brands like E. & J. Gallo’s High Noon and Anheuser-Busch’s Cutwater Spirits, are a fast-growing segment in alcohol as consumers drink less beer, wine and even hard seltzers. The global canned cocktail market was valued by Grand View Research at $714.8 million in 2020. It is forecast to surge 12% annually, posting revenue of $1.8 billion by 2028.
