With a parade of new cannabidiol (CBD) products across a wide spectrum of forms and functions coming to market, the beverage market may be the sleeper CBD category. Large beverage companies are increasingly active in developing CBD beverages to wash into the mainstream.
It’s not hard to figure out that beverages are an ideal way to introduce consumers to CBD. Compared to tinctures and oils, or even gummies, beverages are familiar, easy to consume and already part of consumers’ routines.
We know that people don’t simply use beverages to quench thirst. Beverages are a strong functional product, as well. Coffee, energy drinks, vitamin water, protein shakes and health smoothies are among a long and growing list of functional beverages. Why not CBD?
Key to entering the market for large beverage companies are partnerships with already-established CBD and hemp companies that have carved out their places in the burgeoning market. This display of foresight, combining beverage industry expertise with someone else’s cannabis-market expertise is smart business.
Anheuser-Busch InBev, the iconic American beverage giant, isn’t ignoring the cannabis beverage surge. In 2018, Anheuser-Busch signed a deal with global cannabis production and distribution company Tilray to research and develop non-alcoholic drinks with Anheuser-Busch’s Canadian subsidiary Labatt Breweries. These beverages are planned to include the psychoactive cannabis ingredient tetrahydrocannabinol (THC).
Molson Coors recently released its new Veryvell beverage line through Truss CBD USA, a joint venture with HEXO Corp. The beverages are for now available only in Colorado. The partners plan wider distribution and expanded product options.
As early as 2017, Constellation Brands – the third largest beer company in the U.S. – purchased a nearly 10% stake in Canopy Growth, the largest publicly traded marijuana grower. Constellation later upped that investment in Canopy Growth twice – with an additional $4 billion that increased its stake to 38% and another $174 million to lift its stake to 56%.
Constellation is a powerhouse in the beverage and consumer packaged goods (CPG) industries. It’s the company behind such iconic brands as Corona and Modelo beers, Robert Mondavi wines and SVEDKA Vodka, among others.
Other players in the market include Heineken, with its Lagunitas Brewing Co.’s Hi-Fi Hops, a hops and cannabis blend used to make an IPA-inspired sparkling water. The partnership with California-based see-to-shelf cannabis producer CannaCraft makes three alcohol-free beverages containing THC or a THC/CBD blend.
Positioning For Broad Legalization
While most of these partnerships are focused on the Canadian market, where federal law has made recreational cannabis and cannabis-infused products legal, some are targeted toward specific U.S. states. As the U.S. moves toward a friendlier environment for all cannabis products, these companies will be poised to quickly meet demand in individual states and nationally.
While jumping into the cannabis-infused drinks arena seems like a bold move, established beverage companies unafraid to test the waters may be getting a lengthy head start on those that would rather wait-and-see. Industry watchers seem to agree.
“With global consumers now embracing health focused alternatives, the emerging cannabis drinks market is one of the most exciting sectors within the drinks industry,” wrote Stephen Murphy, co-founder and managing director of cannabis beverage market analysts Prohibition Partners, in “The Impact Series: Disrupting Drinks” report, released in June 2020. “Cannabis infusion will truly disrupt the drinks market and become a highly lucrative source of revenue for those companies ready to embrace it and a new source of social stimulation for consumers around the world.”
The report predicts the global cannabis-infused beverage market will triple to nearly $6.0 billion by 2024. It further found that cannabis is growing in every segment of the industry: alcoholic drinks to energy to wellness to soda, fruit juice, coffee and teas.
Large beverage companies getting into the game now will almost certainly have a jump on competitors of all sizes. They have the experience, distribution and production know-how to firmly plant themselves as market leaders with cannabis-infused drinks.