Product management insights from Molson Coors’s non-alcohol portfolio transformation

I am interviewing speakers at my favorite annual conference for product managers, the PDMA Inspire Innovation Conference. This discussion is with Marlon Hernandez, whose session is titled “Beyond the pint glass: Learnings from creating the new Molson Coors Non-Alcohol portfolio.”

After over 233 years of brewing beer, Molson Coors announced its name change to Molson Coors Beverage Company to reflect its growing focus on beverages outside the traditional beer offers. A successful market entry strategy in the non-alcohol space was one of the critical pillars of the transformational journey into a beverage company. Marlon will share with us the process of defining, shaping, and building this new portfolio and how the PDMA body of knowledge helped him during this process.

Marlon has held different innovation roles at the Molson Coors Beverage Company, including heading the newly established non-alcohol beverages division at its early stages.

Also, this episode is sponsored by PDMA, the Product Development and Management Association. PDMA is a global community of professional members whose skills, expertise, and experience power the most recognized and respected innovative companies in the world. PDMA is also the longest-running professional association for product managers, leaders, and innovators, having started in 1976 and contributing research and knowledge to our discipline for nearly 50 years. I have enjoyed being a member of PDMA for more than a decade, finding their resources and network very valuable. Learn more about them at PDMA.org.

Summary of some concepts discussed for product managers
[3:33] Why did Molson Coors want to create a portfolio of non-alcohol beverages?

Molson Coors has been brewing beer since 1786 with the Molson family in Canada. Adolf Coors starting brewing beers in Colorado in 1873, even before Colorado became a state in 1876. Beer will continue to be a critical part of our portfolio.

Right now, consumers are changing their behavior. They prefer a larger variety of beverage choices. At Molson Coors, we’re a consumer-centric organization. In 2019, we recognized that we needed to expand beyond beer and changed our name to Molson Coors Beverage Company. That was driven by the evolution of our consumers and our distributors. More than 60% of beverages consumed in the US are non-alcoholic, and some of our distributors already had started having products other than beer. The intersection of these factors triggered the creation of the non-alcohol portfolio, which I had the pleasure of leading.

[5:15] What did market research show about why consumers were switching to non-alcoholic beverages?

A combination of multiple factors triggered this change in behavior. In 2008, the Boomer generation reached an age at which their preference for beer declined somewhat.

The new generation of drinkers is more aware of what they’re drinking and more conscious of calories and nutrition. Some consumers love the taste of beer but don’t want to have alcohol at some moments. That triggered the creation of non-alcohol beer options.

Other consumers are looking to energize. The energy drink is one of the fastest growing segments in the beverage category. We want to continue building our portfolio in the direction the consumer is going.

Molson Coors recently launched Blue Moon non-alcohol. People love the taste of Blue Moon, but sometimes they want to enjoy the taste without the alcohol. We want to ensure consumers have options to enjoy every moment of their lives.

[9:06] How did you plan and structure your portfolio?

Even though beer and non-alcoholic drinks seem to be in the same category, there are different consumer behaviors, regulations, and commercial practices involved. Molson Coors has been brewing beer for more than 200 years, but we realized the first step for us was to accelerate our learning about this new category. We partnered with a company called L.A. Libations, which is an incubator for non-alcoholic beverages. This was our fast-track learning process about the non-alcohol space. When you go into a new market space, ensure you have a clear path to help you learn about that space. If you don’t understand your context, it’s really hard to create the right content for that context.

Next, understand your winning aspiration—what are your strengths as an organization and how can you add value in a new and different way? When I was building the market entry strategy for the non-alcohol portfolio, I identified the strengths we have as an organization and how we can add value for all our stakeholders. Molson Coors is an organization with an amazing ecosystem to scale business. When we complement that ecosystem with investment, it allows us to incubate new products and scale products.

As we thought about the winning aspiration, we realized consumers are looking for better-for-you products. We partnered with the energy drink company ZOA, that offers a better-for-you alternative to energy drinks. Our approach was to offer consumers a unique point of difference compared with what exists in the market. Sometimes, we have the temptation to build ten brands at the same time. Pace yourself.

[15:31] There must have been some naysayers who thought you shouldn’t go into the non-alcohol space or that you were cannibalizing your own product. How did you deal with that and keep the team excited to move toward your winning aspiration?

In 2019, the organization established a clear aspiration as an organization, which was premiumizing our portfolio. That was the umbrella over our beer and non-alcohol portfolios.

We asked, what is our interpretation of premiumizing the non-alcohol space to ensure there is consistency with our whole organization? We’re always going to go for non-alcoholic spaces that are more premium. We didn’t see ourselves in the economy segment; that didn’t make sense with the vision of a premium perspective. We went into spaces where consumers are willing to pay more, such as a premium energy drink.

We faced the challenge of keeping our teams excited. We partnered with ZOA, which was co-founded by Dwayne “The Rock” Johnson. The celebrity behind the brand helped get people excited.

Another challenge was in our operation. We invested a lot of resources into educating our organization about the differences between beer and non-alcohol. We have online courses about the non-alcoholic space and commercial practices.

Instead of trying to create something new, we tap into existing processes with small tweaks. We build on the similarities instead of the differences to make integration easier. That helped us make it easy for people to get behind the change. We show them the path we’re going to go down.

We pace ourselves when making changes. If you ask people to change next week, they tend to panic. I think of our change process as a TV series, not a short movie. Season 1 was building the foundation. Season 2 was building the portfolio. Season 3 and 4, where we are now, is about optimizing the execution to become the best in class in the non-alcohol space.

[20:11] How do you show people the path you’re going to take?

Sometimes we live too much in PowerPoint-Land. We dream; we grow market share; we achieve aspiration; we build a portfolio. The challenge for product managers is how we translate that PowerPoint vision into reality. You have to take time to bring stakeholders into the journey. Explain what you’re trying to do and bring people along the journey to help you execute with excellence. Find the right balance between strategy and execution.

I like to use a visual when I explain my vision. I told my team Season 1 was about building a highway, which is the foundation to get the product to market. We need to make sure that when we put the cars, which are the brands, on the highway, that the highway is good. Sometimes when we launch a product, we underestimate the power of the route to market. Sometimes that’s where products fail. The fuel is the investment. You can have a nice Ferrari on an amazing highway, but if you don’t put any fuel behind it, it’s going to stop.

This visual helped people see my vision. The team leading the non-alcohol portfolio is doing a phenomenal job optimizing execution and maximizing the potential behind this brand (ZOA).

[23:56] How did you structure your portfolio?

Our first step was to understand the current state of the non-alcohol category. To make our route to market more efficient, we decided we’re only going to make shelf-stable products. Then we identified the price range that makes sense for our business and our consumers.

Then we looked at the consumer needs in those spaces—refreshing, hydration, energy, wholesome, etc. We identified what problem we’re solving in each of those spaces to help us add value. We identified energy drinks as a critical space. It’s shelf-stable and a growing category. A healthy alternative was missing in that space. We decided to solve that problem.

When we define a portfolio, sometimes you don’t know the answer. You need to go out there. We met with the founders of brands that were in the energy drink space to learn more from them. We found the right partner, which was ZOA.

In the wholesome space, which is drinks that have some additional benefit, we got into milk alternatives. During Prohibition, the Coors family produced malted milk. We wondered if there are any other ingredients behind beer that could be sold in the wholesome space. Recently, we started selling barley milk as an alternative milk.

We looked at where we could use our strengths, like being an expert on barley, and apply them to a different angle. We also focus on products where we have the freedom to develop something that could be disruptive. Since we haven’t been in this category for long, we’re willing to take risks and we have the freedom to design for consumers.

Action Guide: Put the information Marlon shared into action now. Click here to download the Action Guide.
Useful links:

• Connect with Marlon on LinkedIn
  

Innovation Quote

“I skate to where the puck is going to be, not where it has been.” – Wayne Gretzky, ice hockey player

Thanks!

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