Good news for Constellation and Heineken, the cannabis drinks sector has “a lot of room to grow”
As Canada prepares to legalise cannabis for recreational use on 17 October, a new report on the burgeoning sector says the edibles category still has “a lot of room to grow.”
Edibles sales are on track to reach more than $4.1 billion by 2022, according to figures from a report on the burgeoning edibles category jointly published by two of the sector’s research firms; Arcview and BDS Analytics.
Spending on cannabis-infused food and drink reached an estimated $1 billion in 2017 in the United States and Canada, representing around 11.4% of the total $9.1 billion in those two markets.
Troy Dayton, CEO of Arcview Market Research, said that established food and drinks giants from PepsiCo to Constellation are now proactively seeking opportunities to sell in the new market, but this is “just the tip of the iceberg.”
“As the edibles business grows and regulatory fears ease, the pace of intra-industry mergers and outside acquisitions will increase as well.”
Constellation — which makes Corona beer and vodka label Sveda, acquired an initial stake in cannabis firm Canopy Growth in October last year for £141 million (US$179m), back when, according to the Wall Street Journal, the latter had a market value of £1.3 billion (US$1.6bn).
It has since said that it plans to invest a further US$4 billion, to acquire a 38% share of the business, with the transaction expected to close at the end of October.
Constellation are not the only drinks brand with an eye on the growing cannabis market, with the drug becoming legal in Canada on Wednesday.
Last month we reported that Coca-Cola was reportedly in talks with Canadian cannabis producer Aurora to develop drinks infused with CBD.
UK-based Diageo is also in talks with three different Canadian cannabis producers with the view to developing its own line of CBD-infused drinks, while Californian brewer Lagunitas, owned by Heineken, launched its own THC-laced, alcoholic “beer” this summer.
A sparkling wine infused with the drug is also in development. According to Forbes, Californian cannabis-focused agriculture company Terra Tech, which has linked up with Washington-based cannabis drinks maker Valiente to produce a non-alcoholic sparkling wine infused with cannabis called ‘IVXX’.
According to the report, the trending shift toward consumables will continue over the next five years, with flower’s share of total spending dropping from 50% in 2017 to just 36% in 2022.
The report, released on Thursday 11 October, said that, although cannabis drinks market make up a very small portion of the green sector (around 5% of all products), there is still “a lot of room to grow overall.”
“The right number of circumstances — say U.S. national legalisation and a well-known brand moving into cannabis beverage production — could not only expand the beverage category, but edibles in general, beyond the forecasts presented here.”