Molson Coors Beverage Company is investing $100 million in its Canadian operations to build in-house production capability for hard seltzers, an investment that will more than quadruple capacity.
The investment includes a sizable investment in its Toronto brewery to install state-of-the-art reverse osmosis and nanofiltration technology, a new flavor kitchen, a blender and a new sleek-can line. It also will help fuel commercialization efforts for its nascent portfolio of hard seltzers, including Vizzy and Coors Seltzer.
The upgrades, slated to come online in early 2022, will give the brewery capabilities to produce malt-based and spirit-based hard seltzers for the fast-growing Canada market, as well as other beverages, says Brian Erhardt, chief supply chain officer for Molson Coors. The new equipment will allow Molson Coors to increase hard seltzer production by more than 300% at full capacity.
“The No. 1 priority for our Canadian business is ramping up our hard seltzers to position ourselves as a top-share performer,” Erhardt says. “These investments will help us control our own destiny on manufacturing, balancing production between our own facilities and trusted third parties.”
Molson Coors plans to continue to use partners to produce hard seltzers and other beyond-beer beverages, even once in-house capacity is expanded, Erhardt says.
The company projects hard seltzers to grow exponentially into a multibillion-dollar segment over the next few years in Canada, which remains in an earlier state of maturation as compared with the U.S.
And Molson Coors has its eyes on corralling a large share of the segment, starting with twin launches this year of Vizzy and Coors Seltzer.
Molson Coors Canada Chief Commercial Officer Martin Coyle says the release of the two hard seltzer brands in Canada this year “represent our most successful launch” in recent memory. With early reads so promising, he says, the company is committed to pouring fuel behind each.
“We’re talking about putting Coors Light-levels of marketing investment behind these two brands, and we aim to earn the same share in the hard seltzer segment in Canada as we have in beer,” Coyle says. “We have huge ambitions for the scale we want to generate in the next 3 years. This will not be a small, niche business for us.”
Initial reports paint a rosy picture coast-to-coast in Canada. Among the company’s top retail customers in Quebec, for instance, the two brands are among the top five SKUs in the segment, and in some cases within the top two, Coyle says. In Ontario, both brands are off to a fast start. And in Nova Scotia, they already hold a 10 share, he says.
“Forecasts are coming through ahead of projections, and our teams and our customers are asking for more,” he says. “The entire Canadian organization is aligned to making seltzer our No. 1 goal in this launch year, and you can see it in stores across Canada.”
To be sure, beer remains a central part of Molson Coors’ Canadian business. The Toronto brewery that’s receiving the capital investment also handles all Molson brands, as well as Coors Original, Coors Light and some contract production. Vyne, a line of botanical-infused non-alc sparkling waters, also is produced in Toronto.
The $100 million investment will help pave the way for Molson Coors’ Toronto brewery to add capabilities to make other products, such as a line of tea-based beverages, which launched last year amid much fanfare in Canada.
Its new can line is capable of handling up to 1.5 million hectoliters in annual production, and it’s able to fill both the sleek cans that hard seltzers are packaged in, as well as industry standard cans.
Adding hard seltzer capabilities in Canada are part of a broader investment plan to grow Molson Coors’ above-premium hard seltzer business across the globe.
Last year, the company installed new canning lines and other equipment to more than quintuple its U.S. capacity to make hard seltzers and other beverages. That helped the company double its share of the hard seltzer segment in 2020, a trend that’s continued into 2021, where its share has grown by about 50%, data show.
Over the last few years, the company also has built two new breweries in Canada, embarked on a multiyear, multi-hundred-million-dollar project to overhaul and update its massive brewery in Golden, Colo., among other projects.
“Each of these projects are part of our overall initiative to create our supply chain of the future,” Erhardt says.