Cannabis-Infused Drinks Will Be the Next Billion-Dollar Industry and These Companies Are In The Mix

The newly legal Canadian cannabis market is a rapidly-developing frontier that analysts unanimously expect to become the next major industry. While smoking, vaping, and ingesting edibles have traditionally been the most popular way of consuming cannabis, these methods are not expected to be the future of the market. Brett Vye, CEO of the newly formed Truss, believes that cannabis-infused beverages will make up 20 to 30 percent of the sector, and Deloitte predicts that the market will be worth $529 million annually in Canada alone. In the United States, a Zenith Global report projects that the market for cannabis-infused drinks will grow from $89 million in 2018 to $1.4 billion by 2024. The following year, the worldwide market value will surpass $4.4 billion according to a report from Zion Market Research. As demand for cannabis-infused beverages takes off, the companies that are already well-positioned to be first movers in the nascent market—companies like Bevcanna Enterprises Inc. (CSE:BEV), Sproutly Canada (CSE:SPR) (OTCQB:SRUTF), HEXO Corp. (TSX:HEXO) (NYSE:HEXO), New Age Beverage Corp. (NASDAQ:NBEV), and Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF)—will become the leaders of tomorrow’s multi-billion-dollar industry.

To better understand the growing popularity of cannabis drinks, Bevcanna Enterprises Inc. (CSE:BEV) engaged an independent research group to conduct an extensive study of the market. More than 2,000 adults of the legal drinking age from Canada, New York, and California were surveyed about their interest in current and potential products, their likelihood of making a purchase, and their primary motivation for consumption.

The study also asked participants to discuss their preferred consumption format. The results reveal that, while the cannabinoid THC is more widely recognized by Canadians—as are products that allow consumers to inhale pot, such as joints and bongs—Canadians are more likely to purchase CBD-based cannabis beverages in the future than any other cannabis product. In fact, more than 70 percent of respondents to the survey replied that they would “probably” or “definitely” purchase cannabis drinks once they become legal.

Additionally, consumers see CBD-infused beverages as a part of a healthy lifestyle and contributing to their overall wellbeing. In particular, spring water-based pot beverages, such as flavoured sparkling waters, and iced tea performed the best amongst the study’s participants.

Responding to the results of the survey, Emma Andrews—a Registered Nutritionist and the Chief Commercialization Officer for BevCanna (CSE:BEV) —said that, “The opportunity for brand builders is to leverage clean ingredients, in compelling and crave-worthy beverages that appeal to a health-conscious consumer.”

Cannabis-Infused Beverages Will Be Broadly Available and Greatly Attractive

Cannabis consumables for the Canadian market are expected to become legal in October 2019, with retail products able to appear in stores as early as December, based on Health Canada approval. Amongst the first products to be available will be BevCanna’s (CSE:BEV) Anarchist Mountain Beverage line. Combining lightly sparkling spring water with a variety of botanical flavours inspired by plants and herbs found throughout the Pacific Northwest, these drinks are being marketed towards the social drinkers, who is looking to cannabis to help them relax and unwind, and enjoy with friends.

The beverages, which will be THC-dominant to start - a cannabinoid most aligned with social drinking occasions, based on the consumer research study BevCanna completed - will be available in ready-to-drink formats.BevCanna also plans to reveal three more brands in the upcoming months,  for release in Canada and the US, with a range of cannabinoid profiles including CBD dominant beverages, potency, serving sizes, and formats, including powders, shots and ready to drink. BevCanna (CSE:BEV) will also develop products and provide bottling services for white label clients.

“As legalization expands, and consumption continues to become normalized, we intend to build a global presence for our products and brands,” said BevCanna CCO Emma Andrews.

Joining BevCanna (CSE:BEV) as a leader of the cannabis-infused beverage market will be Sproutly Canada (CSE:SPR) (OTCQB:SRUTF). Headquartered in Vancouver, the company reached across Canada to sign a joint venture with Saint John-based Moosehead Breweries Ltd. Together, these companies will develop, produce, and eventually market non-alcoholic cannabis drinks for the Canadian consumer. The drinks will be made from Sproutly’s naturally produced, water-soluble “Infuz2O” cannabinoids, which have a rapid onset of about five minutes and last for approximately an hour and a half.

Another company getting an early foot in the door is HEXO Corp. (TSX:HEXO) (NYSE:HEXO), which signed a deal last year with Molson Coors (NYSE:TAP) to develop its own line of cannabis-infused beverages. This deal yielded the aforementioned Truss, which has been developing a portfolio of beverages that will be market-ready as soon as the products are legally permissible in stores.

New Age Beverage Corp. (NASDAQ:NBEV) is also focusing on the development and distribution of cannabis-beverages. New Age is hoping its Marley Mellow Mood + CBD product will appeal to consumers looking for a health-positive cannabis drink. To this end, the company has made the world’s largest retailer, Wal-Mart (NYSE:WMT), a distributor of its Marley brand.

No discussion of the cannabis-derived product market would be complete without discussing one of the titans, Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF). Curaleaf recently became a contender for the title of largest cannabis company in the world when it purchased Chicago-based cannabis company Grassroots Companies, Inc. for $875 million. However, since the FDA issued a letter of warning directed at the company—criticizing it for marketing cannabis through unsubstantiated health claims—Curaleaf has seen its stock price fall dramatically. This makes the American cannabis giant a potential acquisition target for Canada’s leading cannabis company, Canopy Growth Corporation (TSX:WEED) (NYSE:CGC). Canopy could leverage Curaleaf’s already impressive customer base and product line to quickly become America’s leading supplier of cannabis beverages.

A New Marketing Landscape Emerges for Quick-Moving Companies

As “Legalization 2.0”” sweeps Canada, and the international community continues to recognize the health and recreational benefits of cannabis consumption, producers of cannabis-derived or cannabis-infused products will have to devise innovative strategies for getting their brands to market. Many companies will be vying for a portion of the multi-billion-dollar cannabis beverage industry, but only a few will emerge as global leaders.

Cannabis Drinks Expo was one important means of developing a strategy for market dominance. The expo, which took place in San Francisco on July 25, was the first event to bring the cannabis and beverage industries together to discuss ways to assess, analyze, and capitalize on legalization.

Unsurprisingly, Bevcanna Enterprises Inc. (CSE:BEV) elected to become a sponsor of the expo. Already a member of the Cannabis Beverage Producers Alliance, the company is on the leading edge of cannabis drink advocacy and innovation. Its support of and engagement in the expo will help position BevCanna as an integral part of the emerging cannabis beverage network, which will help connect cannabis cultivators, manufacturers, and marketers with political and medical experts.

The network will likely prove particularly beneficial for BevCanna, as the company lists business-to-business ingredient sales, joint ventures, and brand licensing among its future revenue streams. Even without factoring in proceeds from many of these opportunities, BevCanna (CSE:BEV) forecasts that its revenue will more than triple between the years of 2020 and 2022, growing from $11,851,646 to $37,288,393.

But BevCanna (CSE:BEV) won’t be the only cannabis beverage company turning an early and sizeable profit. Sproutly Canada (CSE:SPR) (OTCQB:SRUTF) stands to benefit from its deal with Moosehead, which will see the creation of fast-acting pot drinks derived from Sproutly’s propriety “Infuz2O” solution. Likewise, HEXO Corp. (TSX:HEXO) (NYSE:HEXO), through its joint venture with Molson Coors (NYSE:TAP), is poised to offer a range of cannabis beverages before the end of 2019.

The New Age Beverage Corp. (NASDAQ:NBEV) will likely be catapulted towards the head of the industry through retailer Wal-Mart (NYSE:WMT), which has agreed to distribute its Marley line, including the Marley Mellow Mood + CBD drink. Also eying American expansion could be Canopy Growth Corporation (TSX:WEED) (NYSE:CGC), a company with the potential to fast-track its entry into that market if it decides to pursue Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) as an acquisition.

Legalization offers a rare opportunity to establish ground-floor control of a market. As no market emerges fully-formed, the next few years will see tremendous growth in a number of industries, especially that of cannabis-infused beverages. Companies hoping to claim a share of the $4.4 billion in worldwide profits will have to move quickly, but fortunately for BevCanna (CSE:BEV) and its contemporaries, all the ingredients for success seem to be there.

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