Coca-Cola, the largest beverage company in the world, has established a new division to develop and manage its alcohol beverage business. The move spotlights the diversification and fragmentation of the alcohol industry, as the largest beverage manufacturers look for ways to benefit from the growing demand for non-traditional alcohol products such as FMB’s, RTD’s and other alcohol-infused drinks.
The new division is a federally permitted subsidiary called Red Tree Beverages. It is reportedly “firewalled” from Cokes non-alcohol business to appease regulators who may have concerns over slotting fees, non-alcohol beverage incentives to retailers, category management and other blurring of the regulatory lines.
In the past, the alcohol segment was fairly clear-cut, with the three distinct categories of spirits, beer and wine. An occasional outlier such as sake would give regulators fits on where it fit into the code of regulations, but generally the lines were bright. But with a new generation of consumers looking for exciting and new drinks, the popularity of non-traditional alcoholic beverages has exploded. Coke-Cola, with $42 billion in revenues last year, clearly sees opportunity as alcohol beverages look (and taste) more and more like their soft drinks.
Watch for new partnerships, brand developments and other alcoholic innovations from Coke in the future.