Molson Coors Beverage Company (NYSE: TAP) reported Q3 performance last week, posting third quarter earnings of $1.75 per share, which beat analysts’ estimates by 12.90% and surpassing last year’s Q3 earnings of $1.62 per share. TAP reported revenues of $2.82 billion which fell short of the Zacks Consensus Estimate by 1.35%. However, the company showed year-over-year growth, beating the $2.75 billion in revenues reported last year at this time.

During Molson Coors’ Q3 earnings call CEO Gavin Hattersley praised the company’s Beyond Beer successes and insisted, “Hard seltzers are here to stay.” Molson Coors is home to several growing hard seltzer brands such as Vizzy, Proof Point and the UK’s Three Fold. The company also handles Topo Chico Hard Seltzer’s production, distribution and marketing in the US and Canada as part of an agreement with The Coca-Cola Company.

“Growing beyond the beer aisle is no longer an aspiration. We’re doing it, and we’re driving scale. Molson Coors’ grown share of the U.S. above premium segment for two straight quarters for the first time in over five years. That mark is largely driven by the continued success of our U.S. hard seltzer portfolio…” Hattersley said.

“There’s been a lot of noise over the past few months about hard seltzers in the U.S., a lot. Not all of it has been accurate, and much of it has been unproductive. Now hard seltzer is going to keep growing at 200% per year. But of course, not. And we’ve been clear since last fall that we didn’t expect them to do so. But in spite of the rosy forecast some had a year ago and the bleak forecast being thrown about today, there are some clear truths. Hard seltzers are here to stay.”

There has been much controversy surrounding hard seltzer performance in recent months. The hard seltzer market experienced extreme and unprecedented growth during the pandemic as quarantine regulations resulted in an off-premise sales boom for the ready-to-drink beverage. Alcohol companies struggled to keep up with consumer demand for seltzers and new flavors were debuting daily.

However, the Boston Beer Company, (NYSE:SAM) made headlines in July after reporting an abysmal second quarter. The company was trading at an all-time high in April, thanks in large part to its flourishing hard seltzer brand, Truly. Boston Beer had lofty Q2 expectations.

Boston Beer missed its revenue goals by $50 million, reduced and then later completely withdrew its F21 guidance, and is currently facing a lawsuit brought on by angry shareholders. Boston Beer isn’t the only major alcohol company being forced to reckon with hard seltzer’s evolution.

Hattersley explained, “…[T]he segment has matured and the easy growth is over. Moving forward, it is going to take distinctive, differentiated brands in order to succeed, and that’s why we feel so confident about our portfolio.” He continued, “We have been saying for more than a year now that seltzers couldn’t grow at the pace that they were growing. But I would say that it’s still up double digits year-to-date. So I mean, the segment is significant, and it’s here to stay,”

Hattersley is confident Molson’s seltzer portfolio will set itself apart from the competition, “But it’s important now, I think, in this new space in the seltzer categories, you need to drive strong brands with a clear point of difference. And that’s why our two seltzer brands grew more share than any other major brewer in the third quarter and why we feel so good about those two brands.”

Vizzy Hard Seltzer launched in April of 2020. The brand has grown consistently since it debuted and now boasts a Watermelon variety pack as well as a Lemonade variety pack. “While so many of the mainstays are declining, Molson Coors has the fastest-growing hard seltzer portfolio in the United States. Vizzy brand volumes grew 50% in the third quarter versus the prior year and passed yet another competitor to become the number four hard seltzer in the United States,” Hattersley stated.

As for Topo Chico Hard Seltzer, which hit shelves in select markets this spring, Hattersley appears excited for continued success and expanded distribution, “Despite only being launched in 16 different markets in the U.S., Topo Chico Hard Seltzer occupies the number three slot as a new item in the general malt beverages category. The brand also garnered a 2.4% share of the U.S. market according to IRI, and this success has led to the national expansion of the brand.”

Going into Q4, Gavin Hattersley will remain committed to the growth of Molson Coors’ hard seltzer brands and its Beyond Beer catalog, “We believe that there is growth to be had in seltzers. We believe that there is strong growth for us in the Beyond Beer space. We recognize the need to offer products beyond traditional beer, and that’s why we’re putting so much so much focus on that. We believe that innovation … around beer and around seltzers will add value to both the category and ourselves over the next three years, and that’s why we’re putting so much emphasis on a really tight and focused innovation portfolio.”

Shirani Jayasuriya
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