Molson Coors to exit CBD business venture in US, end La Colombe partnership

Dive Brief:

• Molson Coors Beverage is winding down its joint venture with Hexo making CBD beverages in the U.S. and ending its partnership with the coffee company La Colombe, the beverage company said in a blog post.
• In ending its Truss USA joint venture with Hexo, Molson Coors cited “no near-term pathway to federal legalization” and “uncertainty in the market” for cannabis products. 
• Molson Coors’ distribution agreement with La Colombe ends March 31, 2023, and it was a “mutual decision” to part ways, Molson Coors’ president of emerging growth Pete Marino said in the blog.

Dive Insight:

Once known just for its iconic brews, Molson Coors pivoted a few years ago into beverages beyond beer that include a diverse range of both alcoholic and nonalcoholic offerings. 

These include a full-flavored seltzer with added probiotics; a plant-based diet soda without calories, sugar and artificial ingredients; and a grain-based milk alternative fortified with protein and nutrients. The emerging growth division is a big part of the company’s future, with Molson Coors targeting $1 billion in revenue from it by the end of 2023.

In placing multiple bets across different beverage categories, Molson Coors can see which trends have longevity and the best chance of succeeding in the marketplace. The company has been candid that some beverage deals it entered into as part of its beyond beer strategy likely wouldn’t pan out.

CBD is one of those categories. While more states are legalizing cannabis, the absence of federal regulations allowing the substance has deterred companies from investing more money into a category whose future is far from certain and where having the ability to scale is difficult, the company noted.

Molson Coors said that as a result, some retailers and distributors have “been hesitant to accept CBD beverage brands, complicating distribution and making the path to profitability a challenge.”

The decision to pull back on some deals allows Molson Coors to invest additional time and resources into partnerships and products that have proven to be successful or have the most promise going forward.

This isn’t the only time the company has gotten out of an agreement. In August, Molson Coors returned the commercial operations of Superbird, a 100% blue agave tequila-based cocktail, to Casa Komos Brands, which will continue the product’s U.S. expansion. The two companies first entered into a distribution deal in 2021.

Pete Marino, Molson Coors’ president of emerging growth, said the company remains “really excited” about its above-premium energy drink ZOA, Five Trail in the full-strength spirits space and Topo Chico Spirited. The company also continues to test and trial other non-alcoholic beverages through its partnership with L.A. Libations.

“We’ve had some hits and some misses, but we’ve learned a ton and we have positioned ourselves for a bright future,” Mariano said. “One of the lessons we’ve learned is to quickly identify when something just isn’t going to work for us, or for you.”

Pulling back from La Colombe makes sense for Molson Coors. Marino noted that the coffee company desires to consolidate the distribution of its ready-to-drink coffees with other products, which “creates significant logistical challenges for our distributor partners while still requiring similar levels of investment on their part.”