HEXO Corp (HEXO)

[FUNMAN]

There’s a thirst for cannabis-infused beverages but which way will the market flow?

Companies are betting big on cannabis beverages as the next big thing in cannabis but will demand reach the predicted highs?

https://www.proactiveinvestors.co.uk/companies/news/902519/theres-a-thirst-for-cannabis-infused-beverages-but-which-way-will-the-market-flow-902519.html

My guess is one if not all of the big beverage giants are going to get this right.

Katie Lewis
12:00 Fri 13 Sep 2019

From cannabis beer to sparkling water spiked with CBD, companies are betting big on cannabis beverages.

And while there’s little doubt that there’s a lot of buzz for cannabis-infused beverages, there’s also an underlying challenge that is a big one: making them taste good.

It’s hard mixing oil with water. Really hard, particularly on an industrial scale. And not all infused products are created equal.

According to Paul Pedersen, CEO of Nextleaf Solutions Ltd (CSE:OILS), a British Columbia-based cannabis extraction technology company, it takes next-level extraction and purification processes to get tasteless, odourless and standardized THC and CBD distillates.

“Chlorophyll, fats, lipids and other impurities affect taste, smell and colour,” said Pedersen in a recent interview with Proactive.

These days, all eyes are pointed towards the cannabis-infused beverage market, which is set to see significant gains over the next few years.

According to a report by Zenith Global, the US cannabis beverage market could grow to US$1.4 billion by 2024. A report from Deloitte pegs the Canadian cannabis-infused beverage market at around C$529 million by 2020. Globally, Zion Market Research valued the global cannabis beverage market at US$1.6 billion in 2018, with estimates that it will grow to US$4.46 billion by 2025.

The outlook for the UK remains murky at the moment, as CBD has been termed a ‘novel food’ by the Food Standards Agency, meaning the impact of consumption has not been sufficiently monitored, according to the FSA. Government departments continue to work on new guidelines, which are expected in the next 18 months.

Companies bet big on cannabis beverages

When it comes to cannabis beverages, the big (and the small) are jumping in the pool. Beer giant Constellation Brands Inc (NYSE:STZ) invested $5 billion for a 38% stake in Canopy Growth Corporation (TSX:WEED, NYSE:CGC), with an aim to roll out infused beverages and other products. Molson Coors (NYSE:TAP) has partnered with Quebec-based HEXO Corp (TSE:HEXO) to launch multiple pot drinks.

Tilray Inc (NASDAQ:TLRY) has paired with Anheuser Busch Inbev (EBR:ABI) with an aim to research THC and CBD drinks in Canada, each investing $50 million into the project.

“It’s too early to know how big cannabinoid-based beverages will be but we think it’s a massive opportunity and it’s something we’re interested in investing aggressively in,” Tilray’s CEO Brendan Kennedy told the media when the deal was announced in December.