Zoa Energy, Molson Coors Beverage’s latest venture beyond beer, seems to be paying for the brewery.
The new energy drink was created by actor and former professional wrestler Dwayne Johnson, his ex-wife Dany Garcia, her current husband Dave Rienzi and Juggernaut Capital founder John Shulman. The brand promises itself as a healthier, more natural energy drink. Molson Coors owns a minority stake in the brand and serves as its distribution partner, helping Zoa’s cans shelf through the past four months.
“It’s the new number of energy drinks in the last four weeks of IRI [data]”said Pete Marino, president of Molson Coors’ emerging growth division.” These are early days, but so far it has been very successful. ”
Zoa is currently sold to more than 26,000 retailers, exceeding 100,000 distribution points.
The energy drink is part of Molson Coors ’major plan to reinvent itself as something more than a beer company. In 2020, he formally exchanged the word “Brewing” in his name with “Beverage” to indicate the change in his strategy.
The change comes when American consumers drink less beer, opting instead for a hard seltzer or alcohol. Last year, the overall volume of beer fell 2.8%, despite total alcohol consumption growing from its highest rate in nearly two decades, according to industry tracker IWSR. In the release of Molson Coors ’second-quarter results, the company said the results of its non-alcoholic brands like Zoa have already exceeded expectations for the full year.
As Molson Coors expands its beverage portfolio beyond beer, it is looking for three beverage categories specifically to drive growth: ready-to-drink coffee, functional water and energy drinks. It has a distribution partnership for canned coffee beverages with La Colombe Coffee Roasters and recently took a stake in ZenWTR, an alkaline water brand that uses entirely recycled packaging.
All three beverage segments that Molson Coors has targeted have seen escalating sales in recent years. For example, the $ 16 billion energy drink category has seen consecutive growth in double-digit retail sales over the past three years ending July 31, according to Nielsen data. And Molson Coors already has an integrated network to distribute the drinks.
“The energy drink category is dominated by [convenience stores], and no one serves the c-store channel better than the beer network and beer distributors, ”Marino said.
According to Nielsen data, convention businesses have made $ 10.57 billion in sales of energy drinks in the U.S. in the 52 weeks ending July 31, nearly double the amount of sales from grocery stores, grocery stores and combined clubs.
“We talked to a lot of other existing or emerging energy companies, and then we had the opportunity to hear about Zoa,” Marino said. “It was one that we really wanted to anchor in our energy drink game.”
One point in favor of Zoa: Johnson’s celebrity. He regularly promotes Zoa – and his other projects – to his 262 million Instagram followers. The most recent posted on the energy drink on Monday.
Johnson also participated in the brand’s first advertising campaign, which aired during the Olympics. Positioning the drink as a more natural option also fits well with Molson Coors ’desire to add healthier drinks to its portfolio.
But Zoa also faces stiff competition. Red Bull and Monster Energy each own about 37% of the U.S. market share, according to Euromonitor International data. But the success of upstart Bang Energy, which is owned by Vital Pharmaceuticals, is an encouraging sign.
“The category is obviously dominated by very healthy competitors, but it could also be disrupted, as Bang has recently done, creating a billion-dollar mark over the next few years,” Marino said.
In 2020, Bang Energy accounted for 8.4% of U.S. energy beverage sales, up from 2.8% in 2018, according to Euromonitor. Similar to Zoa, Bang has appealed to consumers saying he uses only science-backed ingredients.
Molson Coors isn’t even the only company that has noticed growth in energy sales in recent years. PepsiCo bought Rockstar Energy last year and recently launched Mtn Dew Rise Energy, which exploited NBA star LeBron James as its face. It also has the exclusive rights to distribute Bang Energy until October 2023.
Coca-Cola was less successful, creating a cautionary tale for Molson Coors. He tried to use the weight of his branded soda to enter the market with Coke Energy but pulled the drink into North America about a year after its launch. The pandemic has undoubtedly influenced the success of the drink, as the blocks have kept many American consumers at home, dragging time between trips to the gas station and leaving many feeling more rested.
New Covid-19 cases are again on the rise due to the highly contagious delta variant. Five U.S. states have set new records for the number of Covid cases over the weekend. While some states like Louisiana, the hardest hit by the latest wave, have resumed masked mandates, another round of home stay orders seems unlikely at this point. Marino said Zoa’s consumption has not yet been affected.
“Demand signals and speeds are actually growing week after week, so it’s a very encouraging sign for us,” Marino said.