Constellation Brands CEO Bill Newlands told CNBC Wednesday the company is committing big dollars to launch a line of Corona hard seltzers, an alcoholic beverage category that is a growing favorite among millennials.
The spirits company, whose portfolio includes Corona Extra, Modelo Especial and Svedka Vodka, plans on spending more than $40 million in marketing alone to release four seltzer flavors this spring.
“We’re prepared to have one of the biggest introduction spends that we’ve ever had against a single brand, but recognize we’re spending it against a franchise and that’s Corona,” Newlands said in a “Mad Money” interview. “So we’re quite confident that we will get a significant share of this business and we can’t wait for March 1 to roll around.”
The comments came after Constellation released third-quarter results that trounced earnings and revenue estimates for the period ended November. The company also raised its full-year adjusted earnings forecast and investors awarded the stock a nearly 4% gain to $190.29 per share.
Constellation sought to improve its beer portfolio, its biggest moneymaker, with new releases like Modelo Chelada Limon y Sal and Corona Refresca. Beer sales expanded more than 8% to $1.31 billion in the quarter.
Constellation Brands’ Corona Light is displayed for sale at a grocery store in New York.
Scott Eells | Bloomberg| Getty Images
Newlands is anticipating even more growth in the beer market with the launch of its tropical lime, mango, cherry and blackberry lime seltzer flavors. He said on the earnings call Wednesday that Corona is the top seller among consumers aged 21 to 54, which is why the company decided to launch the spiked sparkling water under the Corona label.
Some of the most popular seltzer bottles Corona is set to go up against are White Claw, which is owned by Mike’s Hard Lemonade-parent Mark Anthony Brands, and Boston Beer Company‘s Truly.
While seltzer is taking share from the beer category, Newlands said it’s having a greater impact on domestic premiums. Corona is bottled in Mexico.
“Our belief is our Corona hard seltzer is going to be a really important player in this market,” he said in the interview with CNBC’s Jim Cramer, adding the seltzer market was about “60 million cases last year, and certainly it looks like it could easily double in 2020, and we’re going to get a significant share of that market.”