The race is on for CBD-infused beverages
By Jason Smith
• Beverage companies large and small have CBD beverages on the drawing board
• Three Fortune 500 companies are making plans to move into cannabinoid drinks
• The Alkaline Water Co. is set to capitalize on this trend with its own CBD-infused water
Cannabidiol, more commonly referred to as CBD, doesn’t cause a high. Its attraction lies in its myriad of well-researched health and wellness effects. CBD can be extracted from hemp instead of cannabis, so it could soon be completely legal everywhere.
This opportunity puts beverage companies with a CBD product on a faster path to market and much wider distribution. CBD is about to take off across the United States; The 2018 Farm Bill, which is expected to pass, would legalize hemp cultivation in all 50 states.
With these changes anticipated, the Brightfield Group predicts that the hemp industry could grow by 40 times over the next three years to reach $22 billion in 2022. CBD-infused beverages could be a large part of CBD ingredient demand as the multi-billion-dollar race is on to get a CBD-infused beverage to market.
“We are positioning the company to capitalize on our leading brand Alkaline88® to lead the CBD beverage space. We have a dominant national distribution advantage in the supermarket and drugstore chains. We believe there is a tremendous amount of consumer crossover from those pursuing premium water lifestyle products like ours and we have a significant advantage in the market with our brand reputation and national presence.” — Aaron Keay, Chairman, The Alkaline Water Co Inc
Heavyweight Fight for CBD-Infused Beverage Boom
In early October, PepsiCo’s CFO Hugh Johnston admitted they are interested in pursuing a CBD drink, but the company won’t say any more than that for the moment.
It’s the smaller companies where a big selling beverage product can make a huge impact. Consider New Age Beverages. The tiny company managed to be the second most visited booth at the recent North American Convenience Store show in Las Vegas. The draw? An offsite debut of the company’s CBD-infused products. New Age’s booth response attracted more attendee interest than industry behemoths like Coca-Cola, AB InBev, and Campbell’s.
Like other would-be entrants to the CBD-infused beverage market, New Age is awaiting passage of the Farm Bill to roll out its product. It has initial retail points of distribution commitments that approach 110,000, but those are initial commitments, not necessarily current points of distribution.
New Age is still building its distribution network, and based on market enthusiasm for its CBD products, the company’s share price in October spiked to US$8.94, almost six times its September trading price. NBEV continues to trade around US$4.50, nearly three times its September trading levels.
Small companies like New Age may have a product on the way, but the business isn’t ready to go national. However, there is one company in the space with an existing national distribution network in the U.S. and a CBD product in development.
WTER Poised to Capture CBD Opportunity
The Alkaline Water Co. Inc. (TSX.V: WTER) is moving ahead rapidly to get a CBD-infused beverage product on the shelves.
Four years ago, WTER seemed like a long shot in the bottled water business, an industry that is overwhelmingly dominated by Nestlé, PepsiCo, and Coca-Cola. However, WTER’s Alkaline88® product offering was distinct enough to compete with the giants and thrive.
Now, 39 of the top 50 Super-Grocer chains carry Alkaline88® bottled water, including Kroger, Safeway, Whole Foods, Walmart, and Winn-Dixie. The new A88 Enhanced Beverage Division and the addition of CBD-enhanced water suggest that trend has a lot of blue skies still ahead.
WTER is a unique entrant in the race for CBD drinks. Because it’s smaller than the giants like Coca-Cola and PepsiCo, it has been able to move rapidly to develop a product with strong appeal.
By packing CBD in water instead of a sugary soft drink, with small dosages, the A88 beverages can be enjoyed several times a day. Plus, the alkalinity of Alkaline88® water enhances the stability and effectiveness of CBD.
WTER is big enough to have a rich national distribution system of over 47,000 points of retail that it can piggyback. The company already has seven co-packing plants under contract and the capability to expand instantly anywhere in the U.S. Keay said, “We are positioning the company to capitalize on our leading brand Alkaline88® to lead the CBD beverage space. We have a dominant national distribution advantage in the supermarket and drugstore chains. We believe there is a tremendous amount of consumer crossover from those pursuing premium water lifestyle products like ours and we have a significant advantage in the market with our brand reputation and national presence.”
CBD is on its way to becoming a mainstream product, and this has created a significant opportunity for WTER to thrive and compete with the bottled water giants.