From Miller Lite to aloe-infused water: Molson Coors buys stake in health-focused beverage maker

Molson Coors is partnering with a maker of fermented teas and aloe-infused waters as it expands beyond beer and bets on nonalcoholic beverages.

The brewer announced Monday that it has taken a significant minority stake in L.A. Libations, a health-focused beverage incubator behind brands such as Aloe Gloe organic aloe vera water and The Living Apothecary probiotic kefir water tea.

Molson Coors declined to comment on financial terms or the size of the size of the stake, but The Wall Street Journal, citing unnamed sources, reported that the company took a 49% stake in L.A. Libations.

The investment gives Molson Coors exclusive access to L.A. Libations’ brand creation services as well as a stake in new products launched by the accelerator and an option to buy the brands in full.

Pete Marino, newly named president of emerging brands at Molson Coors, said the partnership allows the brewer to launch non-alcoholic products without having to build out an in-house research infrastructure.

"Their expertise in creating and nurturing brands is especially valuable at a time when much of the growth in the beverage industry is coming from brands and categories that often were nonexistent five years ago," Marino said in a statement.

The moves comes less than three weeks after Molson Coors’ new CEO Gavin Hattersley announced the company’s North American headquarters would move to Chicago from Denver as part of a consolidation plan to free up money to launch new products quickly as well as invest in its iconic brands. Chicago is already home to the U.S. business, which accounts for some 400 of the company’s 17,500 global employees.

The company, which is cutting 500 jobs as part of the consolidation, is changing its name from Molson Coors Brewing Co. to Molson Coors Beverage Co., effective January, to reflect its widening scope beyond beer.

Legacy beer companies have been venturing into new territory amid years of declining volume sales of mass market domestic brews. Consumers have been opting for higher-end drinks and cutting back on alcohol, giving rise to a market for premium alcohol-free beverages.

Nearly half of U.S. consumers over 21, and two-thirds of millennials, say they're making efforts this year to reduce their alcohol consumption, according to a Nielsen survey. The primary motivator across the board is health.

Molson Coors last year acquired Clearly Kombucha, its first purchase of a nonalcoholic brand, and has been expanding it with the help of L.A. Libations.

The California-based accelerator declined to discuss what kinds of products its new partnership might produce but said its focus would be on two areas.

“First, we’ll look at how we can disrupt big legacy categories that have ingredient panel issues,” Danny Stepper, co-founder and CEO of L.A. Libations, said in an email. “These are categories in which we don’t have to do a lot of consumer education. We can just tell people that what we’re offering is better for you than the brands already out there. The other area (is) new categories that might require more education but where we can be an early leader.”

Molson Coors has lagged behind some of its Big Beer competitors in innovating, and in addition to branching out into alcohol-free options it plans to focus on bolstering its portfolio of higher-end beers and popular boozy alternatives like hard seltzers.

aelejalderuiz@chicagotribune.com

Twitter @alexiaer

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