Big alcohol producers such as Anheuser-Busch InBev and Diageo have invested heavily in this category, but the timing has also given traditional soft drink makers a tempting new market, Herzog said. Also, manufacturers and distributors make a higher profit per case of alcoholic beverages than non-alcoholic beverages, according to Kevin Asato, a beverage industry consultant.
In 2018, Coca-Cola stepped foot into the market, introducing Lemon-Dou in Japan, the first alcoholic beverage among its brands since the 1980s. In 2020, the company partnered with Molson Coors to make Topo. Chico Hard Seltzers, and Coca-Cola last year struck deals to produce Fresca Mixta cocktails, Simply Spiked Lemonade and a can of Jack & Coke.
In a company earnings call on February 14, James Quincey, Coca-Cola’s chief executive, mentioned his “early experiments with alcohol,” including Jack & Coke, which is scheduled to go on sale in California by the end of the year. next month, as a way for the company to be “a complete beverage company, everywhere.”
By licensing its soft drinks to established alcohol manufacturers to sell their products through existing distributors, Coca-Cola was able to stay within the regulatory boundaries that separate alcohol producers, distributors, and retailers. This three-tier system has regulated the US alcohol industry since the repeal of Prohibition and seeks to prevent a single company from vertically integrating and suppressing its competitors.
By contrast, PepsiCo has tied fewer of its brands to new spirits (so far only Hard Mountain Dew and Lipton Hard Iced Tea), but has shown a greater willingness to shake up the status quo.
The company created a wholly-owned subsidiary, Blue Cloud Distribution, to maintain greater control over sales and marketing, as well as a larger share of profits. This strategy involved hiring more than 250 employees and obtaining individual state licenses to distribute alcohol, as well as purchasing a fleet of delivery trucks.
Source: NYT Español