Coca-Cola (KO) has teamed up with Molson Coors (TAP) on another line of flavored alcohol drinks. The companies plan to launch Simply Spiked Lemonade, an alcoholic beverage based on Coca-Cola’s popular Simply juice brand, in the U.S. this summer.
Simply Spiked Lemonade will be offered in four flavors; lemonade, blueberry lemonade, strawberry lemonade, and watermelon lemonade. It will be available in a variety pack of 12-ounce cans or a standalone 24-ounce can. The drink will contain 5% alcohol.
Coca-Cola will supply Molson Coors with a beverage base, and the brewer will be responsible for producing, distributing, and marketing the ready-to-drink Simply Spiked Lemonade.
Inspired by Topo Chico
In 2021, Coca-Cola teamed up with Molson Coors to launch Topo Chico Hard Seltzer, which recently began rolling out nationally. Motivated by its success, the companies have launched an extended line under the Topo Chico Hard Seltzer Ranch Water brand.
“Now, we have a huge opportunity to leverage the power of Simply—a brand known for great flavor—to disrupt the full-flavor alcohol segment in a way that’s never been done before,” commented Michelle St. Jacques, Molson Coors’ chief marketing officer.
Building on Simply Juice Success
Coca-Cola has many brands and Simply has risen to be its second-largest in terms of revenue in the U.S. The company explains that Simply juices have become popular as cocktail mixers, which inspired the Simply Spiked Lemonade ready-to-drink alcohol concept.
Dan White, Coca-Cola’s Chief of New Revenue Streams, commented: “The Coca‑Cola Company and Molson Coors have a thriving relationship in North America…The proof is in the success of Topo Chico Hard Seltzer’s national expansion and the introduction of Topo Chico Hard Seltzer Ranch Water. With this momentum, we are excited to expand our relationship with products inspired by another one of our most valuable brands: Simply.”
$2 Billion Market
Coca-Cola is diversifying its business beyond its soda staple and sees huge revenue opportunities in the alcohol market. It notes that the flavored alcohol beverage market, which it is targeting with Simply Spiked Lemonade, is a nearly $2 billion segment that has continued to grow.
Guggenheim analyst Laurent Grandet recently upgraded Coca-Cola stock to a Buy from a Hold. Furthermore, the analyst raised the price target to $66 from $61, with the new price target now suggesting 10.33% upside potential.
Noting that 2021 was a transition year for the soda giant, Grandet noted that Coca-Cola’s sales recovery is outpacing expectations and that emerging markets are particularly stronger. The analyst mentions that Coca-Cola’s portfolio rationalization should make it a more focused organization with better gross margins. Grandet believes the stock’s valuation is compelling.
Consensus among analysts is a Strong Buy based on 9 Buys and 3 Holds. The average Coca-Cola price target of $63.92 implies 6.85% upside potential to current levels.
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