How to Invest in Cannabis Beverages

The cannabis industry is projected to top $75 billion by 2030, according to Cowen & Co., driven by the legalization of medical and recreational cannabis. While many investors have been focused on cannabis flower, concentrates, and edibles, several large multinational beverage companies have taken an interest in cannabis-infused drinks. Investors looking to potentially capitalize on these trends should look beyond the headline opportunities.

In this article, we will take a look at the cannabis beverage market, why CBD-infused beverages could be especially promising, and how The Alkaline Water Company Inc. (TSX-V: WTER) (OTCQB: WTER) is well positioned in the space with its single brand that has already experienced tremendous success in the bottled water space.

Cannabis Beverage Market

There has been a lot of speculation about whether the legal cannabis industry could cannibalize alcohol sales as consumers become more comfortable with the idea of cannabis-infused beverages. Over the past few months, this speculation has led to a series of concrete deals and partnerships between multinational beverage companies and leading cannabis companies across Canada and beyond.

Constellation Brands Inc. (NYSE: STZ) purchased a 9.9 percent stake in Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) in late-2017 to develop and market cannabis-infused beverages. In August, the company increased its stake to 38 percent with a $3.88 billion investment, which also included the right to invest another $3.4 billion to acquire a controlling stake. Molson Coors Brewing Co. (NYSE: TAP) also announced a joint venture with The Hydropothecary Corporation (CSE: HEXO) to develop similar cannabis-infused drinks.

The alcohol industry isn’t the only industry interested in the space, however. The Coca-Cola Company (NYSE: KO) recently confirmed that it is exploring the cannabis space and PepsiCo Inc. (NYSE: PEP) is rumored to be doing the same. New Age Beverages Corp. (NASDAQ: NBEV) and India Globalization Capital Inc. (NYSE: IGC) have recently announced CBD-infused drinks and their stocks have risen sharply over the past three months.

Rapidly Growing CBD Market

The market for CBD is projected to reach $2.1 billion by 2020, according to the Hemp Business Journal. Greenwave Advisors’ Matt Karnes is even more optimistic about the market, saying that it could reach nearly $3 billion by 2021. Unlike psychoactive THC, non-psychoactive CBD products aren’t regulated under the Controlled Substances Act, which means that they can be sold across all 50 states.

Researchers are just beginning to understand how CBD impacts the human body through the endocannabinoid system. ProjectCBD has compiled research showing that it could be beneficial for treating a wide range of conditions like arthritis, diabetes, alcoholism, MS, chronic pain, schizophrenia, PTSD, depression, infections, epilepsy, and other neurological disorders, although more research is needed to prove these benefits to FDA standards.

Cannabinoids, like CBD, can be infused into many different products, including beverages. With the potential benefits of CBD becoming more well-known, consumers may choose these beverages as a way to consume CBD in a way that’s different from a pill, capsule, or edible.

Growing Interest in CBD Water

Vitamin Water paved the way for functional beverages. In 2007, Coca-Cola acquired Vitamin Water for $4.1 billion. The product’s annual revenue went from $350 million that year to more than $1 billion in subsequent years. Since then, functional beverages have become the fastest growing segment of the non-alcoholic beverage industry. FoodBev projects that flavored and functional waters will reach $36 billion in sales by next year.

At the same time, the bottled water industry is experiencing tremendous growth. A Harris Poll conducted for the International Bottled Water Association found that 3-in-5 Americans say bottled water is among their most preferred beverages, which is slightly higher than coffee and much higher than soft drinks. In addition, nearly all Americans believe that bottled water is a healthier choice than soft drinks and should be available wherever drinks are sold.

Google Trends shows that the search term “CBD Water” has rapidly grown in popularity over the past five years. By combining the functional benefits of CBD with the popularity of bottled water, CBD water could become a significant product category over the coming years. There are also few competitors in the space given the recency of the DEA’s decision to green-light CBD and the massive distribution required for bottled water products.

Investing in CBD Water

The Alkaline Water Co. (TSX-V: WTER) (OTCQB: WTER) recently announced its entry into the CBD industry. With an established Alkaline88 brand that’s already rapidly growing, the company is well positioned to capitalize on this large and growing market.

Between 2014 and 2018, the company’s revenue has grown from $600,000 to almost $20 million, and it projects $40 million in annual revenue by the end of next year. Its seven strategically located co-packing facilities have a combined wholesale production capacity of over $100 million, and its products are already found in over 47,500 retail locations, including Walmart, Kroger, CVS, and other popular retailers.

For more information, visit the company’s website or download their investor materials.

Disclaimer

The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.