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Molson Coors (TAP) to Expand Topo Chico Distribution Nationwide

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Molson Coors Beverage Company (TAP - Free Report) announced plans to expand the distribution of Topo Chico Hard Seltzer nationwide from January 2022. The product was initially launched in nine states and seven metro areas across the United States. Driven by positive customer response, the company intends to distribute it in all 50 states of the country.

Topo Chico Hard Seltzer comes in four flavors, namely Strawberry Guava, Tangy Lemon Lime, Exotic Pineapple and Tropical Mango. The Strawberry Guava flavor is available in both 24 oz singles and 16oz single while Tangy Lemon Lime flavor is available in 24oz single can.

Molson Coors has been benefiting from strong growth of U.S. hard seltzers. The company is on track with its hard seltzer ambition, which is key part of the “beyond beer” approach. Its share in the U.S. hard seltzer segment doubled in second-quarter 2021. Topo Chico Hard Seltzer and Vizzy are also gaining  in the United States.

The Vizzy brand gained almost a full point share in the United States in the second quarter driven by the launch of the new Lemonade variety pack. The company also launched the Vizzy Watermelon pack, which has been a hit with the retailers. Outside the United States, the Canadian hard seltzer portfolio is performing well with the Vizzy and Chris Hard Seltzer. In Europe, it is witnessing strong growth for Three Fold in the U.K., and Wai Moment in Central and Eastern Europe.

What’s More?

The company remains focused on the expansion of various other product lines. The Blue Moon LightSky has attained the top volume share gainer rank in the U.S. craft segment. Truss — its Canada cannabis joint venture — is maintaining its position as a market leader in the entire Canadian cannabis beverage market. The company has also entered the fast-growing RTD cocktails space with an exclusive equity and distribution agreement with Superbird and above-premium tequila-based Paloma.

It expects to deliver significant growth through the entire lineup of hemp-derived CBD beverages and fast-growing RTD cocktails. This is likely to drive the company’s emerging drug division to become a $1-billion business, in revenue terms, by 2023.

Management is progressing well with the revitalization plan that aims at achieving sustainable top-line growth by streamlining the organization, and reinvesting resources into its brands and capabilities. The company intends to invest in iconic brands and growth opportunities in the above-premium beer space; expand in adjacencies and beyond beer; and create digital competencies for commercial functions, supply-chain-related system capabilities, and employees.

To facilitate these investments, it plans to generate savings of nearly $150 million by simplifying its structure. The cost-savings program, announced in 2020, targets cost savings of $600 million over three years. Of this, it generated $270 million of cost savings in 2020. The company expects to generate the remaining savings in equal parts in 2021 and 2022.

Backed by such well-chalked-out efforts, management expects 2021 to be a year of top-line growth and business investments. Its guidance also assumes persistent strength in the above premium portfolio, particularly hard seltzer. The company expects net sales to grow in mid-single digits at constant currency in 2021.

Shares of this Zacks Rank #3 (Hold) company have gained 3.3% year to date against the industry’s 1.6% decline.

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