Cannabis-Infused Beverages Are Coming, Will They Be Worth the Hype?

Article by Randi Druzin, Leafly

CANADAINDUSTRY Cannabis-Infused Beverages Are Coming, Will They Be Worth the Hype? RANDI DRUZIN June 17, 2019 CasarsaGuru / iStock

Next month, stakeholders in the cannabis and alcohol industries will gather at a conference centre in San Francisco to discuss the arrival of cannabis-infused beverages and its implications.

In an article looking ahead to this first-ever Cannabis Drinks Expo, Forbes proclaimed that “the next frontier in cannabis is beverages.”

No doubt about it, the future of cannabis-infused beverages is a hot topic. Many industry insiders believe there’s boundless opportunity in this sector, and are counting down the days until edibles are legal across Canada, but others aren’t convinced.

Anticipating ‘huge growth’

In the past year, several big American beverage companies have teamed up with Canadian cannabis producers.

Constellation Brands, which produces Corona beer, paid more than $4-billion (US) for a 38% stake in Ontario-based Canopy Growth with the intention of creating a line of cannabis-infused drinks and other products.

Anheuser-Busch, which produces Budweiser, formed a joint venture with BC-based Tilray to research cannabis-infused drinks. Each company put $50 (US) million into that partnership.

Also, Molson Coors entered into a joint venture with Quebec-based Hexo to establish Truss, a line of cannabis-based drinks.

Interest in the infused sector hasn’t been limited to brewers. Producers of other beverages, including wine and soft drinks, have been moving into the sector or considering it.

The excitement is warranted in the eyes of Jennifer Lee, cannabis practice leader at Deloitte.

“The edibles market alone is estimated to be worth at least $1.6 billion a year in Canada, with cannabis-infused beverages adding a further $529 million,” Lee said in a recent press release. She added that “the introduction of cannabis-infused edibles will clearly threaten the alcohol industry as consumers are using the product for similar usage occasions.”

These words are echoed by Lisa Campbell, founder of Lifford Cannabis Solutions, a Toronto-based business that helps licensed cannabis companies get their products to market. “We see the growth trajectory of cannabis beverages as being similar to that of vape pens with the potential to disrupt other categories and achieve huge growth over the next few years,” she told Leafly.

However, not everyone connected to the cannabis industry is as enthusiastic.

Capped growth potential

“I don’t think the infused beverages sector will be as big as most expect,” PI Financial analyst Jason Zandberg told Leafly. In American states where the sale of such beverages is legal, he noted, they constitute a very small percentage of the market. (Beverage sales represent only six percent of edible cannabis sales in the US.)

Zandberg feels it’s a mistake to liken cannabis consumption to alcohol consumption because there are key differences when it comes to consumer behaviour. He cites dosing as one example.

“It’s more of a challenge with cannabis than alcohol because of the delayed onset,” he said. “In addition, people who use cannabis tend to stop as soon as they feel the effects. That doesn’t happen as often with alcohol. There is an assumption that what works in one sector will work in another, and that is not always the case.”

Read the full article here.

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