Less than three weeks after Molson Coors reported to change its name from Molson Coors Brewing Co. to Molson Coors Beverage Co., the company said it is getting a stronger foothold in the emerging non-alcohol space by making a “significant minority equity investment” in non-alcohol beverage creator and incubator L.A. Libations. Both partners are also entering into a long-term partnership, where beverages will be mutually developed, tested and launched in the Los Angeles metro area, a fertile breeding ground for food-and-beverage trends and new brands, according to Dino Sarti, co-founder of L.A. Libations. The biggest hits will later be funneled into the Molson Coors distribution network.
L.A. Libations, based in El Segundo, Calif., 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.
Founded by three beverage industry veterans in 2009, L.A. Libations’ focuses on identifying consumer trends and either creating or partnering with entrepreneurs to bring new, non-alc beverages to market. Nearly all of its innovations fall under the so-called functional beverage category, have little to no added sugars or artificial ingredients and clean ingredient panels.
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 (inside.beer, 7.6.2018).
The deal, terms of which were undisclosed, was announced today at the Beer Marketer’s Insights conference in New York by new CEO Gavin Hattersley. Hattersleysucceeded Mark Hunter in September and said to shift the focus of the group more towards non-alcoholic beverages. He also laid out a sweeping revitalization plan “designed to streamline the company, move faster and free up resources to invest in our brands and our capabilities” (inside.beer, 30.10.2019).
The partnership represents “a meaningful investment beyond beer” for Molson Coors, Hattersley said in New York. “And I can promise you this — it won’t be the last.”
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 partnership is U.S.-focused and solely on non-alcohol beverages; Molson Coors plans to retain its own innovation team, which will continue pursuing its strategy and projects.
“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."
“Developing a strong portfolio outside the traditional beer category is an important part of our long-term strategy,” Marino said. The partnership “better positions us to be a leader in developing and selling cutting-edge beverages to a broader consumer base.”
“For 130 years, the beverage industry was all about taste and refreshment,” said Danny Stepper, Co-founder and CEO of L.A. Libations. “Today, consumers want it all. They not only want something that tastes good, they want beverages that do something for them.” That could mean drinks that provide energy, aid in digestion, promote skin health or offer other health benefits.
“We’re always on the lookout for the next great beverage brand that satisfies an untapped need of today’s health-engaged consumer,” Stepper says. “We develop and pick brands we think we can go out and prove in the marketplace. We’re not always right, but we’re right more than we’re wrong.”
For L.A. Libations, the partnership with Molson Coors provides access to additional capital to invest behind its ideas and capabilities; access to efficiencies afforded by Molson Coors’ scale and relationships with suppliers; and the ability to leverage its vast distribution network when the time is right.
“Being able to tap into the size and scale of Molson Coors is incredible. Not a lot of emerging brands get this type of opportunity,” Stepper said. “Through this partnership, we’re going to work together in a way that enables a big company to act small but also offer scale as the brands we build get bigger. It’s just a great fit.”
“To me, the goal of this partnership is very clear: We’re going to work together to make Molson Coors a huge player in the non-alcohol business,” Sarti said. “Our track record shows we’re definitely going to put some big wins on the board, and we can’t wait to go out there and do it.”