is forming a joint venture with family-owned D.G. Yuengling & Son Inc. to start brewing and selling Yuengling beer beyond the East Coast, as both companies search for growth amid the pandemic.
Yuengling is the sixth-largest brewery in the U.S., and its beers are currently available in 22 states. Molson is grappling with a yearslong decline of its core light lager brands, and both brewers have weathered a drop in sales this year from pandemic-related closures of restaurants, bars and other venues.
Yuengling plans to expand on its own into three New England states, with beer brewed in its own facilities in Pennsylvania. The partnership with Molson will cover all expansion beyond that, the companies said. Molson will produce Yuengling beers in its breweries and launch them in the second half of next year, they said.
Molson’s research suggests that there is demand for Yuengling across the country, Molson Coors Chief Executive Gavin Hattersley said in an interview. “The sky is the limit because there’s zero Yuengling sales outside those 22 states,” he said. “From a growth point of view, it’s a perfect opportunity for both companies.”
Yuengling’s beers may take some sales from Molson’s existing brands but overall the company expects the partnership to generate more sales, a Molson spokesman said.
The companies didn’t disclose the size of their 50-50 investment. Yuengling will maintain control of its existing business.
Yuengling’s U.S. sales were about $1.6 billion in 2019, or 1.5% of the U.S. beer market, according to Euromonitor International. Its market share has been roughly flat since 2014.
The company was previously unable to expand beyond the East Coast because its only production facilities were in Florida and Pennsylvania and the cost of shipping further west was too high, said Wendy Yuengling, the company’s chief administrative officer. The brewer has launched new products in the past year, including a low-carb beer and a Hershey-branded chocolate porter, in an effort to woo younger adult drinkers.
Molson last year cut hundreds of jobs and moved to expand its portfolio as consumers shifted away from mainstream lagers in favor of Mexican import beers, hard seltzers, wine and spirits.
The company in July reported a 15% drop in second-quarter net sales. However, the pandemic has given a boost to its U.S. retail-store sales as drinkers in lockdown have turned back to big brands like Coors Light and Miller Lite.
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