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The Jack & Coke cocktail could be a home run, analyst says

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Coca-Cola’s (KO) better-than-expected earnings report on Tuesday could be a sign of what lies ahead for the beverage giant as it rolls out a potential home-run product with Jack Daniel’s whiskey.

“I think the Jack Daniel’s and Coca-Cola [ready-to-drink] cocktail could be something interesting,” Wedbush analyst Gerald Pascarelli said on Yahoo Finance Live (video above). “When you just look at the brand equity of the Coca-Cola trademark as well as Jack Daniel’s, and you look at some of the trends within alcoholic beverages and distilled spirits in particular, where prepared cocktails are the fastest-growing segment, that could be something meaningful just given the brand equity of both of those products.”

Coca-Cola and Jack Daniels owner Brown-Forman (BF-A, BF-B) announced a new agreement in late June to distribute the Jack & Coke canned cocktail. The product, which channels a favorite drink ordered at bars for decades, will contain about 5% alcohol and will come in full-sugar and zero-sugar options.

The Jack & Coke cocktail. (Coca-Cola)

The cans will have “clear responsibility symbols” to prevent underage drinking, the companies noted in a joint statement, which also said they are committed to “responsible marketing practices.”

Coke told investors on its earnings call Tuesday it was “excited” about the product’s launch in Mexico this quarter. The product line will hit additional markets in 2023, Coke said.

For Coca-Cola, the Jack & Coke cocktail marks the latest example of the company’s long-awaited move into the alcohol market.

The company’s internal bureaucracy previously held it back from going whole hog into alcohol, a logical extension of its business, but that mindset has changed under CEO James Quincey as he looks to boost sales by selling drinks for different use cases.

Earlier this year, Coca-Cola inked a deal with beer and wine maker Constellation Brands (STZ) to distribute alcoholic Fresca.

“First of all, Fresca fits in with a lot of consumer trends,” Constellation Brands CEO Bill Newlands told Yahoo Finance Live about the launch. “It’s refreshing, it’s convenient, and it’s low calorie obviously. We were surprised that over 50% of Fresca drinkers already mix it with alcoholic beverages. So it seemed like a natural fit to be able to bring that to market in ready-to-serve form.”

Around the same time, Coca-Cola also unveiled a deal with Molson Coors to roll out Topo Chico hard seltzer.

“We are excited about the potential for this brand,” Molson Coors CEO Gavin Hattersley told Yahoo Finance Live about the drink.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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