As Canada prepares for the legalization of recreational cannabis a new report on the burgeoning sector says the edibles category still has “a lot of room to grow.”
Here’s the deal…
According to a new report on the growing cannabis category published jointly by two of the sector’s research firms, Arcview and BDS Analytics, edibles sales, which includes drinks, are on track to generate more than $4.1 billion by 2022.
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, the CEO of Arcview Market Research, said that food and drinks giants such as PepsiCo and Constellation are now proactively seeking opportunities to sell in the new market, but that 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.”
In other words, the cannabis drinks industry, although still in its seminal stages, is poised for huge growth…And according to the report early investments by drinks majors such Heineken are looking uber-savvy.
Victor NY-based Constellation Brands, home to Mexican beers leaders such as Corona, acquired an almost nine percent stake in cannabis firm Canopy Growth last October for US$179m, back when, the latter had a market value of US$1.6bn according to the Wall Street Journal.
And with the announcement that it plans to invest an additional US$4 billion to acquire a 38% stake in the leading Canadian cannabis producer, (a transaction expected to close at the end of October), Constellation may be in the right place at the right time, according to the recent report.
Last month we reported that Coca-Cola was in talks with Canadian cannabis producer Aurora to develop drinks infused with CBD.
UK-based Diageo is also in the hunt having approached three different Canadian cannabis producers with the view to developing its own line of CBD-infused drinks and Heineken-owned Lagunitas is already in the game having launched two THC-laced drink products over the summer.
According to the sector report released on October 11th, “the trending shift toward consumables will continue over the next five years, with the flower’s share of total spending dropping from 50% in 2017 to just 36% in 2022.”
More significant was the report’s assessment 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 legalization 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.”