THE GIST
Molson Coors Beverage Company has a new release to brag about in Blue Moon’s line extension, LightSky. The 95-calorie, can-only offshoot is one of the year’s fastest-growing brands in the craft beer segment as defined by Nielsen, behind only Sierra Nevada’s Hazy Little Thing. That makes it the top-selling new craft beer brand this year (per the “craft” definition used by retailers and market research companies, and not the Brewers Association). Encouraged by sales that exceeded the company’s expectations, Molson Coors will continue to spend to keep LightSky in the “win” column.
That success couldn’t have come at a better time for a company that entered 2020 in a transition phase: Molson Coors recently shed its former name, MillerCoors, and has shifted its portfolio strategy toward brands beyond beer. The multinational needs a star player heading into summer, traditionally beer’s busiest sales season. LightSky so far has been a rare success in beer, a category that’s declined in recent years, and it’s a counter to the many inefficient SKUs that drag down Molson Coors’ portfolio.
Following its launch in early February, LightSky generated just shy of $6 million in sales through May 3, buoyed by strong sales for its parent brand, Blue Moon Belgian White. Blue Moon Belgian White saw 29% growth in off-premise sales for the four-week period ending June 6, putting it up 17.4% in off-premise sales since last year, according to Nielsen data cited by Molson Coors.
As COVID-19 shifted beer buying entirely to packaged products, Blue Moon Belgian White has benefited from national retail placements, competitive pricing, and name recognition—on top of Molson Coors’ big digital ad spend. The company has spent money ensuring the Blue Moon family has prominent placement on direct-to-consumer and ecommerce platforms like Drizly and third-party retailer sites. And it will launch a second creative spot to follow an initial national ad campaign ahead of Memorial Day, which included 15-second TV and digital spots. Molson Coors didn’t disclose exact figures, but a spokesperson said that spending is “on par with other national launches we’ve had.”
LightSky has added incremental sales, too. Andrew “Max” Walker, vice president for marketing for Molson Coors' above-premium beer brands, says LightSky is drawing new customers and new drinking occasions, adding 10% incrementally to the Blue Moon family’s sales. The data isn’t robust enough to say precisely who those new drinkers are, but it’s likely the low-calorie, low-carb offering appeals to some of the same drinkers who’ve gravitated toward hard seltzer, according to Walker. Keeping those drinkers in the beer category, rather than seeing them drift to wine or spirits, is yet another reason Molson Coors will want to throw weight behind LightSky.
WHY IT MATTERS
LightSky’s early success is worth examining for a few reasons. It’s a hot brand in the beer category, which aside from hard seltzers’ and flavored malt beverages (FMB)s’ boom has been on a downward trajectory in recent years. LightSky capitalizes on several strategies we’ve seen work recently: low-calorie/low-carb offerings; line extensions; and high digital and ecommerce visibility. It’s also a bright spot for Molson Coors specifically, a company bogged down by underperforming SKUs that’s been looking outside of traditional beer to drive sales.
Molson Coors will continue to invest in this brand, likely spending millions to ensure its upward momentum, in the hope it can make its trajectory permanent. That’s no easy task for any beer brand to pull off. The industry overall has struggled to make its hits stick. According to Beer Marketer’s Insights, new SKUs made up two-thirds of beer’s growth from 2015-2019, yet of the 3,700 new SKUs that debuted in 2016, only 2,700 were still around three years later. Recent Molson Coors innovations tell a similar story—Two Hats, its “millennial-focused” flavored light beer brand, lasted just six months before the company pulled the plug in 2018.
The company hopes—and will spend to make sure—that LightSky has better staying power. At 4% ABV, 95 calories, and 3.6 grams of carbohydrates per 12oz can, LightSky is firmly within Michelob Ultra territory—an area where breweries have been trying to steal market share for over a year. LightSky also boasts similar calorie and carb counts to White Claw, though it’s less strong by 1% ABV. Those brands have been two of the breakout stars for the beer category in recent years, in part by banking on customers’ interest in alcoholic beverages that are perceived as more healthful.
Many line extensions—including Bud Light Orange, New Belgium’s Voodoo Ranger, and Michelob Ultra Pure Gold—have also proven successful, and have been all the more so during the pandemic, as shoppers gravitate toward familiar brands with prominent retail placement. Consumers who already purchase Blue Moon Belgian White have shown a willingness to try its lower-calorie sibling, but LightSky is also picking up new-to-the-family drinkers.
That’s made LightSky the most successful of the current Blue Moon spinoffs, which include Blue Moon Iced Coffee Blonde and Blue Moon Mango Wheat. Walker says LightSky has performed 15-20% beyond the company’s expectations, although wouldn’t specify what those exact expectations were. The past is littered with Blue Moon spinoffs that didn’t stick—Chai Spiced Ale, Raspberry Cream Ale, White IPA, Grand Cru, and Cappuccino Oatmeal Stout, for example. While LightSky is one of the top-selling new beers of the year, Blue Moon’s seasonal and variety packs are two of the “craft” brands seeing the largest declines (down 26.8% and 19.2%, respectively versus a year ago) in multi-outlet retail sales this year.
Part of its anomalous success is attributable to its brand recognition and ecommerce visibility during COVID. The Blue Moon family saw 28.9% growth in case volume between Feb. 29 and May 30 as measured by Nielsen, outpacing both overall craft (+18%) and overall beer (+16.6%). National ecommerce also continues its COVID-boosted rise, growing $19 billion since May of last year. Molson Coors invested in placing the Blue Moon brand prominently on sites like Drizly, and advertised Blue Moon delivery options on social media during the pandemic.
Molson Coors needs the win. Draft sales have dried up to virtually zero during the pandemic, dealing a significant blow to the Blue Moon family, whose sales are normally evenly split between on- and off-premise. In March, Molson Coors admitted to wholesalers that draft beer sales are dead for the foreseeable future, offering a 50/50 keg buyback on old beer. With on-premise still on hold, Molson Coors is willing to spend money in advertising and other support to ensure a packaged brand like LightSky brings in needed revenue.
Before COVID, the company struggled with lagging brands. That’s a challenge facing many large beer companies, but Molson Coors in particular had “the most work to do to remove underperforming SKUs,” Consumer Edge analyst Brett Cooper told Beer Marketer’s Insights in May. In 2019, 88% of Molson Coors’ brands made up only the bottom third of the company’s sales, and new SKUs weren’t enough to offset their losses. Cooper notes that among recent new products, only LightSky has made a “significant impact.”
Molson Coors’ pivot to non-beer beverages is one strategy to hedge against declining traditional beer sales. Premiumization is also a major focus within the company, Walker says, and Blue Moon is its linchpin.
“We have a premiumization play internally meaning that we want to build category value,” Walker says. “Blue Moon is the most important brand to that category.”
Given Blue Moon’s role in this premiumization play and LightSky’s early promise, expect Molson Coors to continue spending to keep the momentum up. The company has planned a follow-up to its initial national ad campaign. Those ads contributed to “a slight overall increase in marketing spend” in the first quarter of 2020, as the company put money behind Saint Archer Gold and LightSky, according to its Q1 report.
Every day that on-premise accounts remain closed or open at reduced capacity eats into beer’s biggest sales season. Eager to recoup draft losses and demonstrate success with a new product, Molson Coors is likely to keep fanning the flames of its new, low-calorie star.
Words by Kate Bernot