Make way for marijuana beverages

By Nichola Murphy
Monday, 06 November, 2017

We’ve heard of probiotic, alcoholic and infused beverages, but how about a beverage featuring marijuana? Constellation Brands’ C$245 million (AU$251 million) investment into Canopy Growth Corporation, a leading provider of medicinal cannabis products, aims to develop cannabis-infused drinks.

The investment will provide beverage alcohol company Constellation Brands with a 9.9% stake in the C$2 billion Canadian-based medical marijuana company.

Edible and drinkable cannabis is expected to become legal in 2019 in Canada, and both recreational and medical uses of marijuana are becoming increasingly legalised in states across America, which could open up a market with huge growth potential. According to GlobalData, the increasing access to the drug has driven investment in the marijuana market.

‘‘We believe that Constellation Brand’s investment in Canopy Growth Corp, a marijuana growing company, is a sign that the market has potential. Widespread legalisation is making marijuana a trending ingredient, driving innovation in food and drink markets. As a result, the move to enable them to develop cannabis-infused drinks is a good one,” said a spokesperson from the GlobalData Consumer Analyst team.

Although Constellation states it does not intend to sell cannabis products in the US until it is legally permitted at all government levels, the agreement marks the company’s long-term strategy to identify and address consumer trends.

“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” said Constellation Brands President and Chief Executive Officer Rob Sands. “Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction.”

The agreement marks a step towards making cannabis-infused drinks more widely available. This, combined with the legalisation of cannabis, could lead to a decrease in the consumption of alcohol as their recreational purposes tend to overlap. However, GlobalData states that companies should not be concerned about losing sales to cannabis providers, but instead treat it as an opportunity to extend their brand into the cannabis space.

Canopy Growth Corporation is one of the earliest commercial players in Canada’s legal cannabis market, and GlobalData praises Constellation Brands’ — which possesses more than 100 brands in its portfolio — early investment in this category. Together, they plan to share knowledge and expertise.

“We are thrilled to have the backing of such a well-established and respected organisation such as Constellation Brands,” Canopy Growth Corporation Chairman and Chief Executive Officer Bruce Linton said. “We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business.”

Constellation Brands will have the option of purchasing additional ownership interest in the future. The transaction is expected to close in 2018.

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