Molson Tries Cannabis As Beer Sales Decline -- WSJ
August 02 2018 - 2:02AM
Dow Jones News
By Jennifer Maloney
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 2, 2018).
Molson Coors Brewing Co. is turning to cannabis drinks in search
of growth as the No. 2 U.S. brewer reported another quarter of weak
beer sales.
The company said it is forming a joint venture with The
Hydropothecary Corp., a Canadian cannabis producer, to develop
non-alcoholic, cannabis-infused beverages for the Canadian
market.
The brewer's pivot follows similar moves by Corona brewer
Constellation Brands, which last year invested in Canadian cannabis
company Canopy Growth with plans to develop beverages, and Heineken
NV, whose Lagunitas brand this week launched a cannabis-infused
sparkling water in California.
"The decision we had to make was do we want to be a spectator or
a participant?" Molson Coors Chief Executive Mark Hunter said
Wednesday on a call with analysts. "We're going to learn a lot and
if other markets start to open up...or it becomes federally legal,
then we'll be in a good place."
The decline of American light lagers including Coors Light
continues to hurt Molson Coors. Its global volumes fell 2.4% in the
second quarter, driven by declines in the U.S. and Canada. In the
U.S., beer volume dropped 4.8% and revenue decreased 3.1%.
Recreational marijuana use in Canada will be legal in
mid-October, and edible and drinkable cannabis products are
expected to be legalized there by 2019. Independent research firm
Euromonitor International estimates that legal marijuana sales in
2018 will total US$7.5 billion in Canada and $10.2 billion in the
U.S.
In the joint venture, Molson will have a 57.5% interest in a
standalone startup company with its own board of directors. The
Hydropothecary, also known as Hexo, will have the remaining
ownership interest.
Meanwhile, the company said it is "aggressively" focused on its
beer volumes in North America, particularly Coors Light, which lost
market share in the quarter. The company's U.S. business unit,
MillerCoors, plans to hire a new chief marketing officer and "the
No. 1 job will be Coors Light," MillerCoors CEO Gavin Hattersley
said on a call with analysts.
As consumers migrate from beer to wine and spirits, U.S.
beer-industry executives have been debating whether legalized
marijuana could accelerate the decline of beer sales. And they've
considered ways to invest in cannabis without running afoul of U.S.
regulators.
"A transition towards a holistic, responsible intoxication model
will be the end game," said Spiros Malandrakis, head of alcoholic
drinks at Euromonitor, adding that cannabis could provide "answers
to the alcoholic-drinks industry's existential questions."
Startup company Cannabiniers in August plans to launch a
de-alcoholized, THC-infused-beer brand called Two Roots, in
Nevada.
Constellation chief Rob Sands in June said his company is
looking closely at the new Lagunitas Hi-Fi Hops brand and examining
whether Constellation could bring to the U.S. the cannabis-infused
beverages it is developing in Canada.
"There may be things that we can do," he said on a call with
analysts. "And we will do them if we can do them [and they are] not
violative of federal laws."
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
August 02, 2018 02:47 ET (06:47 GMT)
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