- World’s 5th largest brewery has JV with Canada’s HEXO Corp to develop cannabis-infused beverages in Canada
- Getting in early on expected $1.5B - $3B sector in Canada
- Several other companies already targeting this beverage market in the US and Canada
- CBD-infused beverages offer great potential in the US
What’s hot in cannabis today? Hint: according to Bloomberg, it's...
The Next Big Thing
A recent article from International Cannabis Business Conference (ICBC) also seeks to provide investors with some guidance here.
The focus is on Molson Coors Brewing Co’s (NYSE: TAP) planned entry into the cannabis industry. But TAP isn’t the only player salivating at the prospect of entering this niche. More on that later.
The multinational beverage company has entered into a joint venture with Quebec cannabis giant, HEXO Corp. (US: HEXO / CAN: HEXO), via its Canadian unit, Molson Coors Canada.
The JV will be executed under the corporate label Truss. It is aimed at producing new products for the imminent market in Canada for cannabis-infused beverages.
These beverages will become legal in Canada when new regulations come into effect in October of this year.
Mark Hunter, President and CEO of Molson Coors is on the record for estimating the potential size of this new market at approximately CAD$3 billion.
“Clearly there are lots of numbers which are being bandied around with regard to the potential size of the cannabis market in Canada. I think if you take an average, then it suggests that this market may be somewhere between $7bn and $10bn in market value, with beverages somewhere between 20% and 30%. And that’s obviously non-alcoholic cannabis-infused beverages.”
Hunter added a caveat.
“Even if you take the low end of that estimate, then it suggests that the beverages segment could be circa $1.5 bn of value.”
The ICBC article also reports that Molson Coors is taking a hard look at the U.S. market for CBD-infused beverages. With the national legalization of hemp in the United States, this has paved the way for manufacturing/distribution of hemp-derived CBD beverages.
ICBC also makes an interesting observation.
While the entry of big alcohol companies into the industry is likely good for consumers who want a multitude of options to best suit their needs and lifestyle, it also provides an opportunity for smaller companies to find their niche. In many ways Molson Coors will serve as a research department for competitors as they put different types of beverages up for sale.
However, other companies pondering entry into this space won’t want to wait long. Already, a number of other players in the Canadian cannabis industry are actively positioning themselves for this market.
Companies that have announced plans to partially or exclusively focus on this segment include: Canopy Growth Corp (US: CGC, CAN: WEED), Sproutly Canada Inc. (CAN: SPR US: SRUTF), Hill Street Beverage Co (CAN: BEER, US: HSEEF), and Phivida Holdings Inc (CAN: VIDA, US: PHVAF).
Companies eying the U.S. market for CBD-infused beverages will also be looking at a number of competitors who aren’t waiting to target this opportunity.
NASDAQ-listed heavyweight, Tilray Inc (US: TLRY) has a partnership with Anheuser-Busch InBev to develop cannabis-infused beverages. The Alkaline Water Company (US: WTER, CAN:WTER) is already rolling out its own hemp-infused product line.
New Age Beverages Corporation (US: NBEV), based in Colorado and Utah, has a stated goal of becoming the world’s “leading healthy beverages and lifestyle company”.
The emerging market for cannabis-infused and CBD-infused beverages is, at the least, an intriguing option for both cannabis companies and cannabis investors alike.
At this point, no one can attach firm numbers to this opportunity. But neither the companies nor the investors targeting this space can afford to sit on the sidelines for too long.