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Molson Coors' (TAP) Vizzy Hard Seltzer Launch Challenged (Revised)

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Molson Coors Beverage Company’s TAP latest move to get a better share of the growing hard seltzer market by launching Vizzy later this year has been challenged by Austin-based competitor Future Proof Brands LLC that sells Brizzy hard seltzer. The latter filed litigation against Molson Coors Beverage Company and its MillerCoors LLC subsidiary on Feb 6 in an Austin federal court for infringing on Brizzy's federally registered trademark and creating market confusion.

Future Proof states that many wholesalers and retailers are concerned regarding consumers’ confusion with Vizzy and Brizzy as the names sound similar. Moreover, the Austin-based company quotes that the products are also similar, with resembling packaging and usually wholesalers for both companies are also the same. The litigation, therefore, demands to prevent MillerCoors from using the Vizzy name along with some monetary relief.

However, Molson Coors states that market confusion from the Vizzy name is unlikely. Further, Vizzy’s different packaging and unique ingredients reduce the chances of any confusion on the part of the consumers. Further, the company revealed that the application for the Vizzy name was pending with the U.S. Patent and Trademark Office, which published the application for public comment on Jan 28, 2020.

Future Proof had challenged MillerCoors’ application on Jan 29. Notably, Future Proof has a registered trademark for Brizzy, effective Dec 10, 2019.

Growth of hard seltzer demand has brought a sea change in the dynamics of the beverage industry, which was lately struggling with softness in demand for beer, wine carbonated drinks and other spirits, as consumers’ preference shifted to healthy drinks. Total wine volume in the United States declined 0.9% year over year in 2019, marking the first decline in 25 years, according to market research firm IWSR. Beer volume in the United States slipped 2.3% in 2019, which was the fourth consecutive year of a decline.

The growing health-consciousness among drinkers and demand for better, refreshing beverages with more taste variations have brought distilled spirits and ready-to-drink (“RTD”) products to the limelight, particularly hard seltzers. Apparently, seltzers are stealing a large share from the beer, and wine & spirits categories, with a significant share sourced from the beer category. Per IWSR, hard seltzer volume in the United States was 82.5 million cases in 2019 and volumes are expected to more than triple by 2023 to 281 million cases.

To grab opportunities in hard seltzers, beer and wine behemoths like Boston Beer SAM, Constellation Brands (STZ - Free Report) , Anheuser-Busch InBev BUD and Diageo are investing huge sums. Boston Beer has come up with formulations for Truly flavors to make it the best-tasting hard seltzer around. Meanwhile, Constellation Brands will make its biggest investment ever for a single brand (of more than $40 million) to launch the Corona hard seltzer in spring 2020. Diageo is promoting the Smirnoff Seltzer with endorsements. Whereas, Anheuser-Busch’s Natural Light Seltzer recently launched its newest flavor, a delicious strawberry-kiwi blend called House Rules.

Strong Fundamentals

The Zacks Rank #3 (Hold) stock is witnessing positive trends of late on its recently announced revitalization plan, which takes it from being a beer company to a  beverage company. Under the plan, the company intends to invest in iconic brands and growth opportunities in the above-premium beer space; expand beyond beer without hampering the support for its existing large brands; and creating digital competencies for commercial functions, supply-chain-related system capabilities and employees.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Further, the company dropped the MillerCoors segment and streamlined operations into two segments — North America and Europe.

Moreover, as part of the restructuring plan, it is expanding in the above-premium craft beer category and targeting cost reductions across its operations. Consequently, it recently agreed to acquire Detroit-based Atwater Brewery and decided to stop production at Irwindale facility. The actions are likely to bolster its craft portfolio and reduce costs.

(We are reissuing this article to correct a mistake. The original article, issued on Feb 11, 2020, should no longer be relied upon.)

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