Molson Coors is spending $65M to bring more hard seltzer packaging in-house

Dive Brief:

• Molson Coors is spending $65 million on a new warehouse in Fort Worth, Texas, for variety packs as part of the company’s plan to bring more hard seltzer production in-house, the company said in a statement. Construction, which started last week, is expected to be completed later this year.
• The producer of Topo Chico Hard Seltzer and Vizzy said the investment is expected to allow the Fort Worth brewery to remove third-party vendors used for final pack assembly. This move will alleviate shipping costs and improve the time to market.
• As businesses struggle with elevated transportation costs and inflation, companies like Molson Coors are looking for ways to cut expenses while having more control over the products they make. 

Dive Insight:

Despite challenges facing some hard seltzer producers, Molson Coors appears to not be losing momentum. In a speech in May, CEO Gavin Hattersley told an executive panel that Molson Coors doubled its market share in the hard seltzer category during 2021 to 5.7%. It continues to gain share this year.

The strong demand has moved it to No. 4 in the category from seventh in 2022. Hattersley predicted Molson Coors would pass Bud Light Seltzer into the third spot as soon as this year.

The Forth Worth plant is the latest investment by Molson Coors to grow its presence in the category. In 2020, the company invested in capital projects to expand its U.S. hard seltzer production capacity by about 400%. Last year, it quadrupled Canadian hard seltzer production and invested another $35 million in the U.K. to make a range of upgrades, including adding its first hard seltzer canning line.

Molson Coors said the roughly 200,000-square-foot warehouse is expected to enhance the brewery’s ability to do everything from storing, packaging, shipping and logistics for various offerings. The facility will include technology capable of packaging up to six different flavors in 12- or 24-pack configurations.

The expansion will allow hard seltzer that has already been produced and canned at Fort Worth to go directly to the warehouse on campus to be packaged. Currently, the facility has to take the cans to a third party to get placed into the variety packs.

The new warehouse also may be used for future brands the company develops as part of its ambition to expand its portfolio beyond the beer aisle. While Molson Coors is best known for brands like Miller, Coors and Blue Moon, it has been expanding into plant-based milk and struck partnerships to distribute everything from Zoa, an above-premium energy drink with natural ingredients, vitamins, electrolytes and amino acids, to La Colombe ready-to-drink coffee products. 

As companies aim to keep pace with demand, many CPGs such as Hostess Brands, Mondelēz International, J.M. Smucker and Nestlé are building new plants, expanding existing ones or obtaining them through an acquisition.  

For Molson Coors, keeping packaging in-house will save money and enable it to get its products to market faster — an especially valuable attribute in today’s rapidly evolving environment.

One of the attributes younger consumers look for in hard seltzer, in particular, is a variety of flavors. As companies like Molson Coors, Truly maker Boston Beer and AB InBev with Bud Light Selzer look to differentiate themselves and retain drinkers, introducing new flavors and packages with several offerings across different seasons, holidays and themes will be crucial.

Given Molson Coors’ recent success in the category, its investment in Texas and other expenditures around the globe, are as much a bet on the future of hard seltzer as it is that it can do a better job when it comes to packaging by doing it itself.

At the same time, as it continues to grow beyond beer, having the extra capacity will allow it to respond more quickly to changing trends as nascent products in its emerging growth portfolio gain interest. Molson Coors will be able to accelerate output rather than having to wait for an outside third party to ramp up production, allowing it to get its products into the hands of consumers sooner.