(Reuters) - Molson Coors Beverage Co TAP.N said on Tuesday it partnered with D.G. Yuengling & Son Inc to brew and sell the family-owned company's beers outside of the East Coast, while expanding its presence in premium brews.
The 50-50 partnership will see Pennsylvania-based Yuengling expand its presence into 25 other U.S. states, mainly on the West Coast, by using its much larger and established peer Molson Coors’ manufacturing capabilities.
Terms of the transaction were not disclosed.
“This is a huge growth opportunity for us ..there are 25 markets where it is not being sold at all and there is a huge upside,” said Gavin Hattersley, CEO of Molson Coors, which makes Miller Lite and Miller Coors beers.
“There is pent up demand for this brand (in the West).”
Hattersley said the JV would need some startup capital from both sides, but the deal would not materially make a difference to Molson’s own capital budget.
There would also be no threat to Yuengling’s sales eating into Molson’s own brand market share, as it competes in the premium category where Molson has a smaller presence, he said.
Yuengling Chief Administration Officer Wendy Yuengling said the higher costs of shipping to the West Coast from its two breweries in Pennsylvania and one in Florida had limited its abilities to expand earlier.
For Molson, the move is part of new CEO Hattersley’s plan to reinvent its business that has struggled as consumers migrate towards hard seltzer, low-alcohol spirits and more premium beers.
Just a month after he became CEO on Sept. 28, 2019, Hattersley announced Molson Coors would drop "Brewing Co" from the company name to reflect its new strategy that would include venturing into brewed tea and coffee along with beer. (bit.ly/2RqMtme)
Reporting by Siddharth Cavale and Aditi Sebastian; Editing by Shinjini Ganguli and Krishna Chandra Eluri
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