Move Over Craft Beer and Coffee, Cannabis Beverages Are The Next Big Thing
May 2nd, 2019
App, Exclusive, News, Top Story
The craft beer industry has experienced unprecedented growth across the United States with more than 7,000 microbreweries generating upwards of $26 billion in annual revenue, according to Statista. While these beers account for just over 10% of beer sales, those figures jump to nearly 60% when looking at the Millennial population. These same trends exist in other craft markets, such as the market for high-end coffees and teas.
The legalization of cannabis has the potential to dramatically reshape these markets. In recreational markets, such as craft beers, the infusion of tetrahydrocannabinol (THC) could create new experiences for consumers without the adverse side-effects of alcohol consumption. In wellness markets, such as craft teas, the infusion of cannabidiol (CBD) could provide a wide range of potential added benefits to support healthier lifestyles.
The cannabis industry is projected to surpass $146.4 billion by 2025, according to Grand View Research, driven by the liberalization of cannabis regulations around the world. While most of this growth has come from cannabis flower, there’s no doubt that cannabis oils and concentrates are the fastest growing subset of the market. And, cannabis beverages could become the fastest growing subset of that concentrates market in short order.
Zenith Global believes that cannabis-infused beverages could become a $1.4 billion market by 2023—up from just $89 million last year. Cannabis infused beers and teas are just the beginning—THC and CBD are being infused into sodas, ciders, wines, spirits and even bottled water with concentrations ranging from 2.5 milligrams to more than 100 milligrams. Many of these products are already on the market in the United States where legal.
Growing Interest in the Space
Many large beer companies were unprepared for the rise of craft beer, but beverage giants aren’t about to make the same mistake with cannabis. While the alcohol industry has already made sizable investments and inroads into the industry, non-alcoholic beverage companies are increasingly taking a look at CBD-infused products as a way to target the rapidly growing functional beverage subset of the market.
Coca-Cola Co. (NYSE: KO) was rumored to be in talks to acquire a line of CBD-infused beverages in the recent past. While the company decided to hold off for now, the decision to remove hemp from the Controlled Substances list could open the door once again. Hemp-based CBDs could enjoy more widespread adoption without these onerous regulations and ultimately open the door to more mainstream availability.
On the recreational side of the business, Constellation Brands Inc. (NYSE: STZ) invested more than $4 billion into Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) in exchange for a 38% equity stake with warrants capable of bringing the total to more than 50%. Molson Coors Brewing Co. (NYSE: TAP) and Heineken NV (OTC: HEINY) also made strategic acquisitions and partnerships in the emerging cannabis space ahead of these trends.
Investing in Cannabis Beverages
There are many different companies focused on cannabis-infused beverages for both recreational and wellness purposes.Weekend Unlimited Inc. (CSE: POT) (FSE: 0OS1) (OTCQB: WKULF) acquired Verve Beverage Company earlier this year to enter the emerging cannabis-infused beverage space. In addition to Verve Energy, the Company has developed a premium CBD infused energy drink line under the CHAMP brand, which will be targeted to active audiences. In alignment with those audiences CHAMP Energy is the official energy drink of the San Jose Sharks. Verve energy has strong brand awareness with previous widespread distribution across North America that generated $236 million in direct-to-consumer sales. The portfolio’s market recognition and positioning could provide a durable competitive advantage in the lucrative functional beverage space.
Last year Harvest One Cannabis Inc. (TSX-V: HVT) (OTCQX: HRVOF) acquired Dream Water and Dream Water Canada, which has developed a natural, 2.5oz, 0-calorie, liquid sleep shot that’s sold online and in over 30,000 North American retail outlets including Shoppers Drug Mart, Walmart and Kroger. The company has already begun formulation work on a CBD-infused version of the product that’s designed to promote a wide range of potential benefits, such as pain relief and anti-anxiety effects. These products would leverage the same distribution channels that already exist.
Ionic Brands Corp. (CSE: IONC) recently entered the cannabis-infused beverage space with two highly sought-after coffee and tea patents. The two patents enable the production of ISO-certified products that are tasteless, 100% water soluble, and capable of hosting THC and CBD compounds. These attributes are ideal for the craft coffee and tea market, which already generate billions in annual sales around the world. Single-serve coffee could be an especially compelling target for companies in the space.
Cannabis-infused beverages are likely to experience significant growth over the coming years. With many new startups entering the space, there’s a significant opportunity for investors to capitalize on these growth rates as many larger companies begin to look more closely at acquisitions and partnership deals in the space. These could become major catalysts for investors over the coming quarters.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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