Admittedly, it's late to the party.

The hard seltzer craze got going in earnest back in 2016 with the debut of the now category leader White Claw. The Truly brand from Boston Beer is now in a respectable (yet distant) second place in terms of market share, while Anheuser-Busch InBev's Bon & Viv brand is in third. Molson Coors (NYSE:TAP) finally entered the game in a meaningful way earlier this year, first with Vizzy and then with a Coors-branded take on seltzers. But battle lines had already been drawn.

The recently confirmed 400% increase in Molson's hard seltzer production capacity, however, isn't a waste of the company's time or resources. While it will take time to penetrate the somewhat established market, the company has a couple of things working in its favor.

Then, of course, there's the fact that Molson Coors doesn't have much of a choice in the matter, if it wants to have any shot at meaningful growth in the foreseeable future.

Chilled cans of hard seltzers lying in a cooler.

Image source: Getty Images.

Starting out with an advantage

The company's executives had already said it a few times earlier this year, but just for good measure, Molson Coors explicitly noted in a Dec. 1 press release that the company has "officially increased production capacity by more than 400% for the suite of innovations at the company's Fort Worth and Milwaukee breweries." Chief supply chain officer Brian Erhardt explained, "We've seen tremendous growth in Vizzy, Coors Seltzer and LightSky since each of these products were introduced earlier this year, and we're full steam ahead from a production standpoint."

The $64,000 question: How is Molson Coors going to poach other hard seltzer companies' customers to control the double-digit share of the U.S. seltzer market CEO Gavin Hattersley says he'd like to win before the end of the coming year?

At least part of the answer is that Molson Coors won't necessarily have to steal Bon & Viv or White Claw fans to secure at least 10% or more of this market

As much growth as the hard seltzer market has experienced thus far, there's still more to come. Jefferies analyst Kevin Grundy believes the hard seltzer market will roughly double 2019's size to reach $3.5 billion this year, en route to $6.5 billion by 2024. His compelling outlook is less optimistic than the one from UBS analyst Sean King, who is now modeling a market worth $8.0 billion by 2022. Both represent a few billion dollars' worth of business from consumers that have yet to become repeat hard seltzer drinkers, and as such are open to less-established brands.

For perspective, Molson Coors generated about $10.5 billion in sales last year.

The rest of Grundy's growth goal would have to come from consumers already drinking other brands' products. This still isn't a tremendous impasse, though. While Molson Coors has limited experience promoting non-beer beverages, it has plenty of experience addressing alcohol consumers. It's also got a strong Coors name it can leverage for prospective beer-drinking converts who might be willing to try the low-calorie alternative if it had a familiar label on the can.

Of course, doing anything outside of the beer arena isn't a bad move right now. Not only did the company's revenue slide lower last year, but beverage sales as measured by volume also fell by 3.5%. That headwind was a microcosm of the entire beer industry's present challenge. While craft beer sales were up a bit in 2019, overall sales of beer in the U.S. fell 2%, extending beer's broad, long-standing growth slowdown. Sales of spirits and wine, meanwhile, are at least holding their own, even if wine sales hit a small snag in 2019.

The takeaway for investors

It's certainly encouraging to see Molson Coors make an attempt to meaningfully enter a market other than beer, although it remains to be seen if those efforts will pan out. Beer's future is cloudy at best, while hard seltzers have a long growth runway ahead. As rapidly as the market has grown, hard seltzer sales still only account for a small single-digit fraction of the country's alcohol market, which is worth about $200 billion per year. It's even less relevant (relatively) on a global basis.

However, it's hard to say if Molson Coors' big bet on hard seltzers is going to matter enough, soon enough. Even if the company is able to make this category a double-digit piece of its revenue mix by the end of 2021, the vast majority of its sales are still supplied by a struggling beer business. Rapid growth of the former may not offset a contraction of the latter. Investors watching from the sidelines may want to stay on the sidelines for the time being, just to see how this pans out.

Still, the investment in more hard seltzer production capacity is the right thing to do. At least the company is giving itself a shot to drive growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.