As countries around the world begin to lift a nearly century-long prohibition on cannabis, products created with or derived from the cannabis plant are breaking into new markets at an astounding rate. In addition to smoking, vaping, and oil products, customers are choosing to purchase cannabis-infused beverages for both their recreational and wellness applications. This is an under-publicized, but incredibly lucrative slice of the cannabis sector, and companies that market their cannabis-infused beverages the right way, like BevCanna Enterprises Inc. (CSE:BEV), OrganiGram Holdings Inc. (TSXV:OGI) (NASDAQ:OGI), Koios Beverage Corp. (CSE:KBEV) (OTCPK:KBEVF), Sproutly Canada (CSE:SPR) (OTCQB:SRUTF), and HEXO Corp. (TSX:HEXO) (NYSE:HEXO) will be the ones to corner this market just as it begins to mature.
Cannabis-infused drinks are already turning considerable profits, causing some of the biggest beverage companies in the world to begin investing in them. The owners of Heineken, Corona, and Coors have already begun making partnerships with a variety of Canadian cannabis corporations. Even Coca-Cola has reportedly been in “serious talks” to explore its own line of pot-infused beverages.
All this industry attention means that the market is expected to grow considerably over the next few years. In February, Zion Market Research projected that worldwide demand for cannabis beverages would grow from $1.6 billion USD in 2018 to $4.46 billion USD by 2025. Zenith Global, a leading food and drinks consultant, reports that by 2024, the market for CBD beverages alone will be worth $1.4 billion USD in the United States. From its 2018 valuation of $89 million USD, that’s an increase of more than 1,500 percent.
Exciting Products Can Capture a Young Market
The opportunity presented by these numbers is not lost on BevCanna Enterprises Inc. (CSE:BEV). Based in British Columbia, the company has access to 100-acres in the Okanagan Valley that is now licensed to cultivate sun-grown hemp. It also has an on-site world-class manufacturing facility with a spring water aquifer and production capacity of 72 million bottles per shift, per year. This allows BevCanna (CSE:BEV) to ensure that its premium in-house brands and white label products are low-cost and high-quality.
BevCanna (CSE:BEV) only began trading on the Canadian Securities Exchange on July 2 and days after its IPO, the company announced that it had earned an Industrial Hemp Cultivation License from Health Canada. Then, on July 8, BevCanna (CSE:BEV) debuted its first brand, Anarchist Mountain Beverages.
Capturing the frontier spirit of BC, the name Anarchist Mountain Beverages represents the unique site of bottling operations on Anarchist Mountain. Product assortments will include drinks, shots, and powdered mixes. These beverages will be THC-dominant and feature distinct botanical flavors meant to evoke the essence of the pacific northwest, including elements like orchard fruit, pine forests, and wildflowers.
In Oct 2019 Health Canada’s regulations for infused products including edibles and beverages will take effect, with product expected to appear within regulated retail channels as early as December. Analysts expect supplies of cannabis-infused products to be tight when they first go on sale. Because of this, the companies that can position themselves as first movers will be able to establish key brand recognition.
Right beside BevCanna (CSE:BEV) in anticipating Canada’s legalization of recreational cannabis consumables is OrganiGram Holdings Inc. (TSXV:OGI) (NASDAQ:OGI). On July 8, OrganiGram announced the development of proprietary technology for the production of liquid and powdered water-soluble cannabinoids. However, the company has yet to announce how or where it will manufacture these beverages.
Already well-positioned, Koios Beverage Corp. (CSE:KBEV) (OTCPK:KBEVF) entered into an exclusive licensing agreement with CanCore Concepts Ltd. through its subsidiary Cannavated Beverage Co. The agreement will see CanCore produce, market, and sell a line of beverages that are both infused with cannabis and offer nootropic supplements from Koios’s functional beverages.
Another agreement leading to innovations in the cannabis drink market is the one signed between Sproutly Canada (CSE:SPR) (OTCQB:SRUTF) and New Brunswick-based Moosehead Breweries Ltd. The brewing company is interested in producing a line of THC beverages that will take effect in roughly five minutes and last up to an hour and a half. While neither company has yet revealed how they will be making these products available, Moosehead’s experience marketing intoxicating drinks will likely give it an advantage.
Similarly, HEXO Corp. (TSX:HEXO) (NYSE:HEXO) formed a joint venture last year with Molson Coors Canada. Together, the two will work towards developing non-alcoholic, cannabis-infused beverages for the Canadian market. Like Sproutly, HEXO can leverage the experience of the alcohol giant to target consumers looking for recreational drinks with industry insight and precision.
Innovative Marketing is Required to Be Both Responsible and Lucrative
When Health Canada announced its regulations for cannabis edibles in June, many industry insiders felt the restrictions were “tight” and “risk-averse.” Companies looking to break into the burgeoning cannabis consumables industry will have to put considerable effort into ensuring that they are compliant. This extends not only to the cultivation and manufacturing side of the business but to the marketing side as well.
It is critical that BevCanna Enterprises Inc. (CSE:BEV) and its contemporaries appeal broadly to consumers while adhering to government regulations. To achieve this balance, BevCanna has signed an exclusive marketing agreement with Dossier Creative, a world-renowned brand design firm. Dossier has already helped establish brands like Mike’s Hard Lemonade, Trace Beverages, Naked Grape, Bodacious, The Little Potato Company, Jackson Triggs, Vega, and many more.
In addition, BevCanna (CSE:BEV) announced on July 16 that it is bringing Dossier’s co-founder and innovation director, Don Chisholm, onto its team. Chisholm will become the company's Chief Brand and Innovation Manager, a role that will see him help develop beverage concepts, IP, visual designs, marketing and sales materials, digital properties designs, and content messaging.
Other companies like OrganiGram Holdings Inc. (TSXV:OGI) (NASDAQ:OGI) will be marketing its own line of liquid and powdered water-soluble cannabis products in the near future. Koios Beverage Corp. (CSE:KBEV) (OTCPK:KBEVF), through its wholly-owned subsidiary Cannavated Beverage Co. has already partnered with CanCore Concepts Ltd. The Colorado-based CanCore will be marrying the Cannavated nootropic formula into its own well-established line of cannabis beverages.
For its part, Sproutly Canada (CSE:SPR) (OTCQB:SRUTF) signed an agreement with Moosehead Breweries Ltd to create a suite of alcohol-free marijuana beverages that will provide a unique experience for consumers without breaking Health Canada restrictions. Like Sproutly, HEXO Corp. (TSX:HEXO) (NYSE:HEXO) partnered with a major alcohol producer— Molson Coors Canada—to rely on recreational drink industry experience to help break into the newfound market for cannabis drinks.
As cannabis-infused beverages begin to line shelves alongside beer, coffee, and soft drinks, companies like BevCanna that market the uniquely appealing aspects of their products to the new base of consumers - along with established manufacturing infrastructure and assets - will be the ones to capture this soon-to-be sizable market in its earlier days.
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