PepsiCo and Sam Adams brewer Boston Beer are teaming up to create an alcoholic version of Mountain Dew.
Boston Beer will develop and produce the drink, called Hard Mtn Dew, while Pepsi has created a new entity to sell, deliver and market the product. The beverage is expected to hit shelves in early 2022.
Hard Mtn Dew will belong to the flavored malt beverage category and contain 5% alcohol by volume. Early images of the products also show that it will contain zero sugar.
The first hint that Pepsi could enter the alcohol category came in October, when Pepsi CEO Ramon Laguarta told analysts the company would consider the move. It followed an announcement from rival Coca-Cola that it would create Topo Chico Hard Seltzer, its first alcoholic beverage for U.S. consumers in decades, through a partnership with Molson Coors Beverage. Pepsi also filed a trademark application in June to sell Rockstar-branded beer and hard seltzer.
Pepsi has been trying to use the heft of the Mountain Dew name for several years to move the soda into new categories, like energy drinks. The company launched Mtn Dew Rise Energy earlier this year. According to Euromonitor, Mountain Dew holds about 7% market share in carbonated soft drinks, putting it in fifth place.
For Boston Beer, the partnership with Pepsi comes as the company’s own products struggle. In its latest quarter, the company’s rosy projections for its Truly hard seltzer were hit with a reality check, causing the stock to tumble 26% in one day and the brewer to cut its full-year forecast.
Meanwhile, the beer category as a whole has been struggling. Last year, overall beer volume declined 2.8%, despite total alcohol consumption increasing by its highest rate in nearly two decades, according to industry tracker IWSR. Boston Beer also recently announced a partnership with Beam Suntory to bring its iconic brands into new categories.
Boston Beer shares were trading down more than 1% on Tuesday. The stock is down more than 31% since January, putting its market value at $8.29 billion.
Pepsi shares are up less than 1% in trading Tuesday. The stock has gained 4% year-to-date, and its market value tops $213.88 billion.
