Molson Coors Beverage Company’s faith in Dwayne Johnson-backed energy drink brand ZOA is rock solid.
The beverage conglomerate “will strengthen its investment” in ZOA as part of its overall Beyond Beer non-alcoholic beverage growth strategy. As part of the investment, Molson Coors will remain ZOA’s exclusive distribution partner and will gain a seat on the brand’s board of directors. Financial terms of the deal were not disclosed.
After its launch in 2021, ZOA quickly established a prominent footprint in the U.S. and Canadian markets thanks to Molson’s distribution network with a strong trial sales period. But the new investment arrives as ZOA has faced sharp declines to its brick-and-mortar sales in the U.S. against a saturated energy category.
Initially introduced with a line of zero sugar 16 oz. canned energy drinks, ZOA unveiled a rebrand across its product line, shifting to a 12 oz. canned format and reformulating the liquid to increase its caffeine and Vitamin C content, as well as introducing several new flavors. The brand has been a prime component of Molson’s Beyond Beer strategy and comes on the heels of Molson’s acquisition of whiskey distiller Blue Run last week, which marked its first spirits portfolio brand.
According to the company, ZOA is available in over 42,000 retail locations with more than 160,000 total points of distribution across the U.S. and Canada, as well as online. The company said it reported more than $100 million in sales in 2022 with 138% year-over-year growth.
However, scanner data has suggested that the brand’s core energy drink line in U.S. brick-and-mortar MULO and convenience stores has struggled against the broader energy drink category: in the 52-weeks ending August 12, NielsenIQ reported the brand was down -26.1% (accelerating to a -41.1% drop in the two-week period), while Circana cited its dollar sales at -18% to $36.6 million in the 52 week period ending August 13, including grocery, drug, mass, convenience, military and select club and dollar retailers in its data set. Neither data set tracks Canadian sales, or ecommerce or foodservice sales.
The challenge for ZOA has come as the energy drink category has become one of the fastest growing beverage segments with rising involvement from strategics. In addition to Monster Energy’s continued dominance of the space (which appears poised to continue with Bang in its portfolio) PepsiCo-backed Celsius surpassed $1 billion in sales this year, while Keurig Dr Pepper has aligned with C4 and Anheuser-Busch has fueled Ghost. Independent beverage marketer Congo Brands has also had dual success in the space with Alani Nu and its PRIME Energy line, which launched in January and reported over $106.1 million in retail dollar sales in the 52-weeks ending August 26, according to NielsenIQ.
In the natural channel, much of ZOA’s retail business has been serviced by brand incubator L.A. Libations, in which Molson Coors also owns a minority stake. Danny Stepper, co-founder and CEO of L.A. Libations, told BevNET that while ZOA had a strong opening when it launched in 2021 – supported by a strong media push featuring The Rock, including a Super Bowl ad – he acknowledged that driving repeat sales has proved challenging.
“We opened on Broadway, really big and really fast,” Stepper said. “We made some mistakes, like all brands do, in the beginning.”
However, with the recent reformulation and rebranding, he said the company has learned from the initial rollout and now believes ZOA is poised to compete in the current energy drink landscape with repeat rates in the natural channel that are “super compelling.”
“What we have now is built for speed,” Stepper added.
Since March, ZOA has been run by CEO John Galloway, a former president at Godiva Chocolate and a veteran at PepsiCo overseeing marketing for Gatorade and IZZE, who initially joined the brand as president and CMO in December.
With the new investment, ZOA now intends to double its media spend and marketing budget for 2024, continuing to focus on its “Fuel Something Bigger” campaign consisting of digital, out-of-home and paid social media ads.