Coca-Cola and Corona brewer Constellation Brands are teaming up to create alcoholic cocktails under the Fresca soda brand.
It’s the latest partnership between beverage companies to blur the lines between drink categories in the hunt for growth. Nonalcoholic beverage manufacturers are diversifying their portfolios as soda consumption shrinks and new regulated beverage markets, like CBD-infused drinks, are on the horizon. Coke’s rival PepsiCo is rolling out Hard Mtn Dew with Boston Beer in February. This latest collaboration marks Coke’s second foray into alcohol since the 1980s, following the recent success of its Topo Chico Hard Seltzer launch in partnership with Molson Coors Beverage.
Since its introduction to the U.S. market in 1958, Fresca has undergone several makeovers and reformulations to attract U.S. consumers, but this will be the most ambitious move for the brand yet. Fresca Mixed Cocktails are slated to launch this year in the U.S.
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"The Coca-Cola Company’s FRESCA brand is not only trusted by consumers, but also directly delivers on consumer preferences for refreshment, flavor, and convenience — attributes that also play well within beverage alcohol and where we can leverage our expertise," Constellation CEO Bill Newlands said in a statement.
Constellation will produce, market and distribute the cocktails through its three-tier distribution network.
According to Coke, Fresca is surging in popularity recently, making it the fastest-growing soda trademark in the beverage giant’s U.S. portfolio. And its grapefruit flavor makes it a common choice as a cocktail mixer already.
In addition to jumping on Fresca’s current demand, the two companies are aiming for a slice of the growing spirits-based canned cocktails category. In 2020, U.S. consumption of canned cocktails grew 52.7% from the previous year, accounting for 6.9% of the total volume in the alcoholic ready-to-drink category, according to data from IWSR Drinks Analysis. Constellation’s spirits portfolio includes Svedka vodka and Casa Noble tequila.
Shares of Constellation were up less than 1% in premarket trading after the company released its latest results Thursday morning. It topped Wall Street’s estimates for its quarterly earnings and revenue. Coke’s stock was roughly flat in premarket trading.
This story first appeared on CNBC.