High on Thirst: How Companies Like Canopy Growth Inc. (CGC), Tilray, Inc. (TLRY), and Sproutly Canada, Inc. (SRUTF) Will Revolutionize The Beverages Market With Cannabis-Infused Drinks
Among falling sales of alcohol and soft drinks, cannabis-infused beverages are expected to bring much-needed refreshment to the declining market.
If cannabis would become legal in your country, would you smoke it?
As the regulations in North America become more relaxed, numerous marijuana ventures come to realize that pre-rolled joints and dry flower are not their best-selling products. The popular choice on the black market is apparently not appealing enough to the model consumer.
Studies state that first-time users might be interested more by eating cannabis consumables, rather than smoking it.
It can seem unusual – especially with the nature of the substance. But among health concerns, people are likely to look for solutions that align better with the modern lifestyle.
This year, Canada will become the first country to legalize cannabis edibles on a state level. That opens a market full of opportunities to a handful of companies, who own the technology to deliver the expected quality.
Is the new beverage renaissance going to start thanks to the efforts of Canopy Growth Inc. (CGC), Tilray, Inc. (TLRY), and Sproutly Canada, Inc. (SRUTF)?
Growing under a star
Canopy Growth Inc. (CGC) plays it big on the cannabis market. Not only do they sport the highest market cap of all marijuana stocks, peaking at $16.5 billion. With CA$71.6 million in gross sales, Canopy handles roughly 80% of global cannabis-related revenue.
The competitive position of Canopy Growth stems from a whopping $3.67 billion in cash sitting on their accounts. Much of this is the effect of last year’s investment from Constellation Brands, Inc. (STZ) – the largest global beer import company measured by sales.
Constellation has invested $4 billion into Canopy Growth, taking 38% of its stock. This move is aimed at offsetting the negative trend that impacts Constellation on the alcohol beverage market. By partnering with Canopy Growth, Constellation secures a foothold on the cannabis market, while planning to release its own line of cannabis-infused drinks.
The exact nature of the product is yet to be unveiled, but as Constellation has benefited from the first-mover advantage in the sector, they shouldn’t postpone the premiere later than October 17th.
As proper financing in the cannabis sector can be still difficult to obtain, Canopy did not hesitate long after the investment and has started to expand its operations. With their eyes set on the United States, the company has recently acquired the rights to buy U.S.-based Acreage Holdings (ACRGF), opening a broad path to distribute Canopy’s products over the border.
As the market for marijuana-infused beverages is predicted to be worth $600 million in the US by 2022, this seems to be a reasonable direction.
Buds in your Bud
Tilray Inc. (TLRY) is one of the top 10 stocks in the marijuana sector. Their outreach and technology have been recognized by Anheuser-Busch InBev SA (BUD), which has turned towards Tilray with an offer of researching cannabis-based beers together.
The two companies plan to invest an impressive $100 million dollars to comprehend the nature of cannabis beverages and prepare a line of products that would captivate the consumers.
The future of this venture seems uncertain, as some raise concerns that the owner of the Budweiser brand is not putting enough resources behind the partnership. Moreover, Tilray’s CEO Brendan Kennedy has announced that the company will be shifting its focus towards overseas markets, further undermining the expectations of releasing a cannabis beverage anytime soon.
Tilray’s stock value has plummeted among comments that the deal has been more PR-oriented than focused on developing a new product. The company’s shares have lost another 22% in April and came back to August 2018 levels, almost resetting their value to the moment Tilray has been listed on the exchange.
Officially, the cooperation between Tilray and Budweiser owners is in progress. Despite initial troubles, the project possesses the capacity to take off and deliver a cannabis beverage this year.
Fizzy and fuzzy
While Canopy Growth and Tilray are figuring out the recipes to marry beers and cannabis, Sproutly Canada, Inc. (SRUTF) has a product ready to hit the market.
The company believes that cannabis-infused soft drinks will resonate with a broader audience than beer-based drinks – it will also circumvent the mooted restrictions that won’t allow cannabis and alcohol to be mixed in one product.
Sproutly has acquired the technology to dissolve oil-based cannabinoids in water – an impossible process by regular means. With that, they possess a cutting-edge solution that allows delivering clear and tasty drinks that target the expectations of a mainstream consumer.
The chemistry behind the effects is also noteworthy, as Sprotuly’s products mirror true-to-strain smoking effects rather than the couple hours of a strong edible trip. With the onset of five minutes and cessation of effects after 1,5 hour, their Infuz20 line of drinks holds the potential to become the go-to choice of new and seasoned cannabis users alike.
Though much smaller than Canopy or Tilray, Sproutly owns the potential to expand thanks to the partnership announced last month with Moosehead Breweries Limited. With Sprout’s technology and Moosehead’s established brand, they will form an exclusive joint venture to develop, produce, and market cannabis-infused beverages in Canada.
Despite being on different stages of project development, the companies above have predicted the consumer sentiments well. By offering marijuana in a more mainstream form, they might have the tool to reach towards a new, vast audience and fill the market with their products before it becomes crowded.
Will cannabis-infused drinks become the new “it” in the beverage sector, or the only ones brought to a new high will be its users?