Will Canopy Win Its Cannabis Beverage Gamble?
Partnering with Constellation Brings Bottling Experience to Canada – LPC
It seemed inevitable that Canopy Growth would take the cannabis beverage gamble. After all, its partner Constellation Brands is one of the biggest bottlers in the US.
However, despite all the buzz about cannabis beverages, they haven’t really taken off in the US in states where they are legal. Taste is one of the major drawbacks. THC does not mix easily with liquids, often resulting in particles and a “bong water” taste.
But Canopy is betting on an even bigger misstep in the US. Paul Weaver, Canopy’s director of innovation, said marketing to current cannabis users is a mistake.
“It’s not surprising that the cannabis beverage category has been pretty small in America,” Weaver said. “We would argue that’s because of a poor product design (i.e., taste) and misunderstanding who your core consumer could be.”
Weaver said that the better cannabis beverage gamble is new users. They would be more likely to try cannabis if it were in a familiar beverage format, he said. Due to THC restrictions in Canada, cannabis beverages can only have 10mg of THC anyway. Only one of Canopy’s beverages has the maximum with the rest between 2.0mg and 2.5mg. This would be more enticing for new users.
Five Million Bottles a Big Cannabis Beverage Gamble – LPC
No matter how you cut the deck, Canopy’s new 125,000-square-foot bottling facility is a big cannabis beverage gamble. The facility can churn out more than five million drinks a month. One analytics firm estimates the cannabis beverage market in the US is only about six per cent of the total market. But Canopy might be playing at a different table. The alcohol industry in Canada is worth $23.2 billion, Weaver said.
“Any way you do the math, it can show a tremendous opportunity,” he said.
Other companies are making a cannabis beverage gamble including Hexo Corp. in partnership with Molson Coors. Province Brands has a “cannabis-brewed beer” that it plans to bring to market in 2020.
It might be difficult to convince consumers to try cannabis beverages. But then, Jell-O was a tough sell at first, simply because it was so new. It’s not hard to imagine companies selling cannabis beverages as lifestyle drinks – even luxury relaxation drinks. There is evidence that consumers are looking for a “chill” alcohol alternative. And the thing about the cannabis beverage gamble is that it could pay off big.
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