That question arises in the wake of today’s announcement that the company has taken a “significant stake” in L.A. Libations, a non-alcohol beverage creator and incubator.
“At a time when much of the growth in the beverage industry is coming from brands and categories that often were non-existent five years ago, (L.A. Libations’) expertise in creating and nurturing brands is especially valuable,” said Pete Marino, president of emerging growth for Molson Coors, the division under which the partnership will be managed. “This essentially adds on to our M&A pipeline and allows us to pursue opportunities in this space without needing an extensive non-alcohol infrastructure.”
L.A. Libations is known for developing and bringing to market novel and emerging brands aimed mostly at health-conscious consumers, such as Zico Coconut Water, Core Water and Body Armor. L.A. Libations also partners with brands to provide retail selling and in-store execution services, relying on deep relationships with a slate of major national retailers.
Under terms of the deal, Molson Coors will receive two seats on L.A. Libations’ five-member board. It will get a stake in new products launched and access to brand creation, brand building and consulting services. Molson Coors also will have exclusive rights to purchase brands created by L.A. Libations in full. For brands it opts not to purchase, Molson Coors still will hold a financial stake in L.A. Libations’ ownership of the brand.
The two companies have an existing relationship: L.A. Libations has been working with Molson Coors to expand the Clearly Kombucha brand it acquired in June 2018.
COMMENT: It was just a little over 14 months ago that Molson Coors thought it had found its salvation – investing in Canopy Growth Group, a Canadian marijuana producer. A year before that, it paid $12 billion to become the 100% owner of MillerCoors and to regain the right to make and sell Miller Genuine Draft and Miller Lite in Canada. Lately it’s been buying up craft brewers. It kicked Pabst Brewing Co. out of its Eden, N.C., brewery, which is closed. Now it thinks by entering the soft drink space it has solved its problems.
Maybe this move is part of some grand strategic plan. If it is, it’s not apparent to us. What is apparent is that as tough as the beer business may be, the soft drink business is tougher. We suspect that five years from now, it will be crystal clear that the winner in this deal is L.A. Libations, just as last year’s deal winner was Canopy Growth, and the year before that the winner was Anheuser-Busch InBev which got a big infusion of cash when it needed it.