In an effort to battle falling beer sales, Molson-Coors has embraced Canada’s legal cannabis market by partnering with The Hydropothecary Corporation to create a cannabis beverage startup, according to a Wall Street Journal report.
The startup formed by the partnership will stand alone, with its own board of directors. Molson-Coors will own 57.5% of the new startup corporation and Hydropothecary Corp. the remaining stake. Molson-Coors Canada CEO Frederic Landtmeters said Molson-Coors’ goal is to create high-quality products that meet consumers’ “evolving drinking preferences.”
Quebec-based Hydropothecary Group, Molson-Coor’s partner in the venture, is publicly traded in Canada as HEXO. Shares rose nearly 25% today after the announcement. HEXO aims to be one of the largest cannabis producers in Canada and is on track to produce more than 100,000 kilograms of cannabis once the company’s warehouse grows are fully licensed and operational.
Molson-Coors said in a press release that the company is “aggressively addressing” its declining beer sales in the U.S. and Canada. Global sales volumes have fallen 2.4% in the last quarter. Other beer companies are facing similar market changes as more states and countries legalize cannabis.
Constellation Brands, makers of Corona, as well as Heineken and the startup Cannabiniers are all entering the cannabis beverage market.