Molson Coors and La Colombe Coffee Roasters agree to end distribution agreement

From MolsonCoors & Peter Frost:

Molson Coors said today that the company and La Colombe Coffee Roasters have jointly agreed to end their distribution agreement effective March 31, 2023.

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The decision comes as La Colombe seeks to combine operations of its ready-to-drink coffee business, which the Molson Coors network distributed, with its bagged coffee and cold brew coffee multi-serves.

“Over the past few years, we have opened new lines of revenue for all our businesses as we leverage the competitive strengths of Molson Coors and expand beyond the beer aisle,” said Pete Marino, Molson Coors’ president of emerging growth, in an email to U.S. distributors.

“We’ve had some hits and some misses, but we’ve learned a ton and we have positioned ourselves for a bright future,” he said. “One of the lessons we’ve learned is to quickly identify when something just isn’t going to work for us, or for you.”

Hence the mutual decision to part ways with La Colombe, whose desire to consolidate distribution of its ready-to-drink coffees with other products “creates significant logistical challenges for our distributor partners while still requiring similar levels of investment on their part,” Marino said.

“We love the brand and wish La Colombe the best moving forward, but we believe this is a decision our distributors will greatly appreciate.”

Chuck Chupein, president of La Colombe, said Molson Coors "has been a great partner. They have invested significant resources against building their team and demonstrated the ability to sell successfully non-alc brands like ours.”

While La Colombe “would welcome the chance to stay involved with Molson Coors for certain classes of trade as we look to benefit from more synergies in our businesses,” the coffee company recognizes “why that doesn’t make sense for them or many of their wholesalers.”

Molson Coors and its network of independent distributors have distributed La Colombe’s specialty ready-to-drink coffee products in convenience, drug and certain big-box stores since January 2021.

U.S. CBD market exit

Molson Coors and joint-venture partner Hexo Corp. also said today they have agreed to unwind their Truss USA joint-venture and exit the CBD beverage business in the United States effective Dec. 31.

While several U.S. states have legalized cannabis products in recent years, including a handful in the recent election cycle, there remains no near-term pathway to federal legalization, leaving uncertainty in the market.

That’s left some chain retailers and distributors hesitant to accept CBD beverage brands, complicating distribution and making the path to profitability a challenge.

Should the regulatory landscape in the U.S. change, the company said it would be prepared to re-enter the space. At the time, however, the ability to scale in the category remains difficult, Marino says.

For Molson Coors, the two decisions will allow the company to invest more time, energy and resources behind spaces outside the beer aisle that offer the most growth potential, such as ZOA in the energy drink space, Five Trail in the full-strength spirits space, and Topo Chico Spirited, a forthcoming offering in the spirit-based ready-to-drink cocktail space. The company also continues to test and trial other non-alc beverages via its partnership with L.A. Libations.

“Not every project or innovation will meet our ambitions. What’s important is that we learn from each and build capabilities that will serve us well into the future,” Marino said. “The key for us is to go big behind what’s working and smartly pivot out of what isn’t working from a scale standpoint, like CBD beverages.”

Marino says Molson Coors is “really excited about ZOA, Five Trail and the Coors Whiskey Company and Topo Chico Spirited, and we are looking forward to a great year in 2023.”

Molson Coors will continue to evaluate “the long-term growth potential of every new product we bring into our portfolio,” Marino said. “I know the best is still yet to come.”