Labatt acquires B.C. distillery known for its ready-to-drink mixed alcoholic beverages

Labatt Breweries of Canada has acquired a distillery known for spirits and canned cocktails as the brewery looks to expand its ready-to-drink offerings a bright spot for a company grappling with a declining beer market.

Labatt announced Monday that it has acquired Delta, B.C.-based Goodridge & Williams. The distillery makes the Nutrl vodka and vodka soda drinks, along with several other spirits and mixed drinks.

"The ready-to-drink category in Canada has grown by double digits in recent years," said Labatt president Kyle Norrington in an email, citing industry data from the past three years that tracked the rise of pre-mixed drinks, like vodka sodas and gin and tonics.

The vodka soda market, in particular, saw triple-digit growth over the past three years, he said.

Spirit sales growing as beer drops

Spirits, which includes ready-to-drink products, maintained the largest portion of the Liquor Control Board of Ontario's sales in 2019, according to its most recent annual report. Spirits brought in $2.5 billion or 39 per cent of all sales.

That year, the province's spirits market grew 7.6 per cent, according to the LCBO report up 8.6 million litres to almost 122 million litres.

The pre-mixed and packaged cocktail segment doesn't show any signs of slowing down, said Norrington in a statement.

That presents a contrast to the overall beer industry. Domestic and imported beer sales fell 0.3 per cent from 2017 to 2018, according to Beer Canada, a trade association. Meanwhile, per capita consumption fell 1.2 per cent to 74.6 litres in 2018, according to its most recent figures.

That drop isn't new. In 2011, Canadian beer consumption per capita was 83.4 litres, according to a 2017 report from market-research firm Mintel. By 2016, it was 76.9 litres a trend the firm said partly came thanks to Canada's growing senior population drinking less beer.

Ready-to-drink category on trend

Beer makers are embracing other alcoholic products, especially those in the rising ready-to-drink category, to combat sluggish beer performance.

That same Mintel report highlighted a growing interest in hard soda with a quarter of Canadians interested in consuming such a product.

Last October, Montreal-based Molson Coors Brewing Co. announced a restructuring effort that includes changing its name to Molson Coors Beverage Co. as it focuses on expanding beyond beer.

The company will work quickly to push into the spaces of premium ciders, hard seltzer and CBD-infused, non-alcoholic drinks, said the company's CEO Gavin Hattersley at the time.

Labatt also jumped on this trend when, back in late 2015, the company announced it was adding ready-to-drink brands Mike's Hard Lemonade, Palm Bay and some ciders to its portfolio.

Operations at G&W to remain the same

The G&W acquisition furthers its offerings in this space.

The distillery's founder Paul Meehan said in an email "Nutrl is currently the fastest growing vodka soda ready-to-drink beverage and represents close to half of the vodka soda segment."

"Considering the growth of the category and the segment, we see continued growth opportunities for this brand."

He will continue to lead operations there, and all 15 employees will retain their jobs. They will work to create new products.

For competitive reasons, G&W can not disclose too much detail, but "we have an exciting lineup," wrote Meehan.

The distillery will continue to invest in its Tempo gin smash, which it launched late last year, "and other brands are in the pipeline," he said.

Labatt will help grow the distillery's products through its distribution channels, among other things. Nutrl vodka soda, for example, now sells in B.C., Alberta, Saskatchewan, Manitoba and Ontario.

With Labatt's help, "we will make the brand even more available across Canada," said Meehan.