Coca‑Cola Company chair and CEO James Quincey added additional color to the news that the soda giant had obtained a federal basic alcohol permit and launched an alcoholic beverage subsidiary, Red Tree Beverages, in the second quarter. Quincey described Red Tree “more of a technicality than some new big step.”
“It isn’t a change of strategy, and it’s not a vehicle to distribute in the U.S.,” he said during the company’s Q2 earnings report. “It allows us a better platform to engage with the partners that we’re working with in the U.S. in terms of coordinating and influencing the marketing and allows us a better separation of the alcohol versus the non-alcohol band.”
Red Tree is “more an optimization of the model and how we want to execute things rather than a different thing.” Bev-alc is “still a small part of the business.”
“Jack and Coke has got some really promising nice results, including in the U.S.,” he said. “Simply Spiked Peach is performing very nicely in the U.S. If you want to look for a really bright spot, you can hedge the Philippines and Jack and Coke and Lemon-Dou, which is an alcoholic lemon drink, got well over 30% share of the RTD [ready-to-drink] category.”
The early results are “very encouraging,” Quincey said. The company will “continue to take a measured approach” and keep testing and learning, he continued.
“All of this needs to generate belief that it can be material for the Coke company, not just a nice business, and that we’re still in the process of driving towards,” he said. “But certainly, so far, we’re pleased with what’s taken place and we are encouraged about the next steps that we have to take.”
Several Coca-Cola brands have been licensed for alcoholic beverages, including Simply and Topo Chico (Molson Coors), Fresca (Constellation Brands) and Coke (Brown-Forman).