Some of the globe’s most prominent businesses are giving cannabis drinks a lot of attention, in a niche sector of the industry.
The burgeoning popularity of CBD drinks is raising interest across North America, with companies like Molson Coors Beverage Company and Canopy Growth Corporation opening up multistate distribution and predicting huge jumps in sales at all levels of the hemp spectrum, from nonintoxicating CBD sports beverages to THC-infused alcohol alternatives.
The American Trade Association for Cannabis and Hemp (ATACH) launched a Cannabis Beverage Council earlier this year, which included Adolphus Busch V, the heir of Anheuser-Busch.
“There’s been massive interest among not just cannabis companies, but also mainstream beverage companies,” ATACH president Michael Bronstein said.
For a dormant industry, it’s a lot of focus.
Nielsen’s analysis of CBD products available outside Colorado found that, in general, sales were down by about 32% across major chains in grocery, drug, and convenience stores.
Sales of CBD beverages fell steeper than the drop in CBD products across the board, dropping 13% in the same time frame.
THC mixed drinks do not appear to be generating any more sales.
In five Western states tracked by analytics firm Headset, dispensary beverage sales account for below 2% of overall cannabis sales.
So, why are major consumer packaged goods corporations so enthusiastic? Three primary reasons have been identified by analysts:
- Alcohol producers are on the lookout for new products because alcohol consumption (beer consumption in particular) has dropped dramatically over the last few decades.
- Cannabis-infused beverages have improved in taste thanks to recent manufacturing and emulsion improvements, which have made them comparable to early cannabis beverages that were derided as “skunk water” for having chlorophyll tastes and a greasy aftertaste due to fat-soluble cannabinoid molecules that fell out of suspension or linked with the plastic lining in the can.
- There will be fewer places where adults may lawfully smoke or vape.
It doesn’t just get you high
Because THC beverages are still prohibited in the United States, both Molson Coors and Canopy Growth claim to be growing their businesses with hemp-derived CBD.
“CBD and other nonintoxicating cannabinoids are more than placeholders for the drink industry,” according to Carmen Brace, Aclara Research’s founder.
“Functional beverages are among the most interesting food items on the market today,” she said.
“Everyone is looking for innovation roadmaps to increase their share of the stomach by morning, noon and night. Customers are increasingly demanding meals that fulfill more than just taste requirements.”
Aclara teamed up with Ipsos this year to interview 1,100 cannabis and CBD users in jurisdictions where adult-use marijuana is legal. Despite the fact that beverages are the least popular manner of consuming cannabis, the industry is expanding.
“Maybe beverages are not as popular as flower, vape, or edibles – but they’re more often utilized during social gatherings.” according to Brace.
“As more customers seek for meals with a purpose, the functional beverage becomes more essential.”
According to experts, big alcohol companies’ interest in the cannabis business makes sense. People are drinking less beer, which means they’re looking for something new to sip on.
“The beer business is having a difficult time right now,” Stephen Kaufman, a Harvard Business Review podcast host and senior lecturer at Harvard University, told the Boston Globe.
Kaufman went on to say:
- The most popular alcoholic beverage among Baby Boomers and Generation X’ers is beer, which accounts for 50% of all alcohol consumption.
- Only 25% of alcohol consumption is in beer for Millennials, with the rest in wine and hard liquor.
- For Generation Z, beer accounts for just 12.5 percent of alcohol consumption.
“So their business is going down the drain,” Kaufman added.
In 2019, Molson Coors changed its name from the Molson Coors Brewing Company to the Molson Coors Beverage Company.
Cannabis may appear to be a good match for firms that already market into tightly controlled industries.
“To them, it’s an untapped market. They’re looking outside of beer for growth, and marijuana is regulated and causes users to get intoxicated. So they’re like, ‘This is a fantastic area for us to operate in because we’re used to the regulation and advertising adult products to other adults,’” Nesin said.
The beverage industry
Despite the fact that major food and beverage corporations like Molson Coors and Canopy have recently announced plans to enter the cannabis market, they face the same headwinds as other large cannabis producers.
That is the situation we are in because beverages will continue to be trapped in research and development until additional countries follow Canada’s lead and regulate drinks for domestic and international trade.
Outside of Canada, data on cannabinoid drink sales are unreliable, according to Nesin, and the largest consumer packaged goods makers are avoiding the market.
“The marijuana and hemp industries’ prospects for growth are based on federal rules and legalization, which allow respectable companies and competitive integrity to thrive,” he continued.
“I think that’s going to make a big difference in the beverage industry, which is quite complex to scale and has stringent requirements for well-formulated and consistent products.”