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Monster Beverage finally enters alcohol category with $330m acquisition of CANarchy

A new Monster is lurking in the alcohol segment.

After considering launching its own hard seltzer, a rumored merger with Constellation Brands as well as other opportunities, Monster Beverage has opted to enter the alcohol category with the acquisition of craft brewer CANarchy. The move gives the energy drink giant access to a portfolio of craft beer brands and, more importantly, turnkey beer manufacturing and distribution.

It wasn’t a matter of if but when Monster Beverage would first enter the alcohol segment. The answer was revealed today when the energy drink giant acquired CANarchy, a craft beer and hard seltzer producer, for $330m in cash.

CANarchy’s craft portfolio consists of Cigar City (Jai Alai IPA and Florida Man IPA), Oskar Blues (Dale’s Pale Ale and Wild Basin Hard Seltzer), Deep Ellum (Dallas Blonde and Deep Ellum IPA), Perrin Brewing (Black Ale), Squatters (Hop Rising Double IPA and Juicy IPA) and Wasatch (Apricot Hefeweizen).

The move comes as the lines between the non-alcoholic and alcoholic segments continue to blur. Earlier this week Coca-Cola (which owns 17% of Monster) agreed to partner with Constellation Brands to launch an alcoholic version of Fresca. Coke also created a hard seltzer version of Topo Chico with Molson Coors and extended the line with a new Ranch Water Product which launched last week. The moves come after PepsiCo announced last year that it will debut Mountain Dew hard seltzer product with Boston Beer.

The acquisition is a sign of the times, says Duane Stanford, editor of Beverage Digest. “Monster isn’t going to sit on the sidelines at a time when the lines are blurring. They are looking for ways to fill trucks, add scale and generate growth.”

Monster Beverage had considered launching its own hard seltzer but feared the window was closing on that segment. It has also been linked to merger talks with Constellation Brands and Boston Beer. For the moment, it opted for a deal with CANarchy as its opening move into alcohol. “It’s a foot in the door,” says David Steinman, executive editor, Beer Marketer’s Insights. “At this point you can assume everyone is talking to everyone across the aisle about potential ways to move forward and find that next wave of growth.”

Indeed, other moves are likely for Monster, says Gerry Khermouch, editor, Beverage Business Insights. “They have $1.7b in cash, $330 million is nothing. There’s lots of talks about what else they will do next.”

The biggest prize of all for Monster in this deal is the manufacturing, distribution, licenses and other aspects of the alcohol segment that it now possesses. “This transaction provides us with a springboard from which to enter the alcoholic beverage sector,” said Monster’s vice chairman and co-chief executive officer Hilton Schlosberg in a statement. “The acquisition will provide us with a fully in-place infrastructure, including people, distribution and licenses, along with alcoholic beverage development expertise and manufacturing capabilities in this industry.”

Khermouch adds, “it will be nice if the beer brands flourish, but this is more about having a turnkey alcohol operation.”

The deal is expected to close in the first calendar quarter of 2022 pending customary regulatory approvals.

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