Molson Coors announced today it has taken a minority ownership stake in California-based beverage incubator L.A. Libations, a move that gives the beer conglomerate access to a broad portfolio of brands as it moves to expand its play in non-alcoholic categories. Terms of the deal were not disclosed.
Molson Coors CEO Gavin Hattersley announced the partnership today during the Beer Marketer’s Insights Conference in New York City. The deal comes as the company moves to reinvent itself as a total beverage company, dropping the MillerCoors name and combining its U.S. and Canadian units to become Molson Coors Beverage Company effective in January. Molson Coors will also gain two seats on the L.A. Libations board of directors.
The deal comes at a pivotal time for L.A. Libations, which parted ways with longtime partner The Coca-Cola Company this summer. The incubator also said farewell to executive vice president David Meniane in March, who left the company to take a c-suite role at US Auto Parts. L.A. Libations has now hired Adam Louras as VP of operations and brand creation. Louras most recently served as COO of Dirty Lemon parent company Iris Nova.
Speaking with BevNET, L.A. Libations CEO Danny Stepper said that, facing a crossroads of whether to work independently or find a new corporate partner, he spoke with “pretty much” every major U.S. beverage conglomerate before agreeing to work with Molson Coors.
“To sum it up, they’re blazing a new trail,” Stepper told BevNET. “They made a decision to get into the non-alcoholic space and this is a space where we’ve lived and made a lot of noise. It’s new to them so this marriage lets them stay focused on what they’re really good at. But at the same time, it gives them equity in non-alc brands, non-alc customer relationships, and non-alc brand creation capability over night.”
MillerCoors first signalled interest in the non-alcoholic beverage space last year when it purchased California-based Clearly Kombucha. In March, the company announced a rebrand for Clearly that it launched at Natural Products Expo West 2019.
Pete Marino, president of emerging growth at Molson Coors, told BevNET that prior to the investment, the company worked with L.A. Libations on the Clearly Kombucha brand.
“As far as we’re concerned, L.A. Libations is an accelerator in our ambition to play in the non-alc space,” Marino said. “As the beer market continues to evolve in the U.S. and other countries around the world, consumers are showing they are no longer dedicated to one type of beverage when they’re going out to drink. They’re more and more curious, more and more experimental…. As we pursue growth, we felt we needed to take advantage of [non-alc] in a bigger way.”
L.A. Libations’ portfolio includes partnerships with brands such as ARYA, Limitless, The Living Apothecary, Positive Beverage, Szent, and Trimino as well as its own creations Gloe Brands and Arriba Chelada. The company has also invested in ketogenic milkshake brand Space Shake.
While much of L.A. Libations’ business model will remain the same, Stepper said that under Molson Coors the company will put more emphasis on its own brands. As well, he noted that the portfolio currently has “white space” which the L.A. Libations team will work with Molson Coors to fill.
However, one category L.A. Libations won’t be playing in is alcohol. According to Marino, the goal of the partnership is firmly to tap L.A. Libations “expertise” and relationships with non-alc customers.
According to Marino, Molson Coors will own “a significant piece” of all new brands created by L.A. Libations and will have the opportunity to invest in the incubator’s partner brands. L.A. Libations partner brands will not automatically gain access to the Molson Coors distribution network, but Stepper noted that “it is the ultimate destination.”
“Our job is not to sell into the system, our mission is to create moments for brands and to create moments for those brands where consumers can find them, discover them, fall in love with them so the Molson Coors network will want these brands,” Stepper said.
As MillerCoors reinvents itself in the new year as the Molson Coors Beverage Company, L.A. Libations is one part of a broader expansion. Marino added that the company is exploring opportunities in wine and spirits and has formed a joint venture with Canadian cannabis company HEXO Corp. to create hemp-infused drink maker Truss Beverage Co.
Stepper noted that while L.A. Libations isn’t looking at alcohol for the moment, cannabis is one category he is very much interested in.
“We’re definitely exploring cannabis, there’s no way to ignore it and one of the things I love about this new partnership is that Molson Coors is being very responsible with how they think about it, but they share our view it’s a big opportunity,” Stepper said. “It’s not possible to be a total beverage company and ignore that space.”