Beverage giant Coca-Cola is teaming up with Corona brewer Constellation Brands to produce a new line of alcoholic ready-to-drink cocktails under the Fresca soda brand. The partnership will allow the two companies to take advantage of a growing beverage category as they both seek to increase profits.
The new canned ready-to-drink cocktail, called Fresca Mixed, will reportedly be released to the public later this year. The drink will mainly be produced, sold, and marketed by Constellation Brands. The deal's financial specifics were not disclosed.
Fresca is currently one of the fastest-growing beverages under Coca-Cola's North American offerings. The flavored citrus drink contains no sugar and zero calories, making it popular amongst health-conscious adult consumers.
Fresca has undergone multiple makeovers and reformulations to entice U.S. customers since its entry to the market in 1958, but this will be the most significant change for the brand yet.
As global soda consumption declines and new types of beverages become more popular, traditional nonalcoholic beverage makers are now attempting to further expand their portfolios. In February, PepsiCo, Coke's main competitor, launched its new Hard Mtn Dew in collaboration with Boston Beer. Anheuser Busch also recently announced a line of Bud Light-branded alcoholic seltzer.
According to Constellation Brands market research, alternative adult beverages, including ready-to-drink cocktails, are now an $8 billion industry that is expected to expand at a 15% to 17% compound annual growth rate over the next three years.
Data from IWSR Drinks Analysis showed that canned cocktails consumed in the U.S. had increased by 52.7% over the previous year, accounting for 6.9% of total volume in the alcoholic ready-to-drink category.
Coca-Cola's collaboration with Constellation Brands marks its second foray into alcohol since the 1980s, following the recent success of its Topo Chico Hard Seltzer launch in partnership with Molson Coors Beverage.
Coca-Cola North America's chief of new revenue streams, Dan White, said that both companies share the same passion for giving customers a "best-in-class beverage experience. He added that the partnership is an ideal one given the two companies' focused approach and distilling expertise.
Constellation's chief growth, strategy, and digital officer, Mallika Monteiro, said the partnership would allow the two companies to expand their respective portfolios and give customers more drinks to choose from.
Constellation's stock was up less than 1% in premarket trading Thursday, following the release of its latest financial report. The company managed to top average Wall Street's projections for its quarterly earnings and revenue. Coca-Cola's stock remained flat in premarket trading following the announcement of the deal.
