One might be surprised to learn that Coca-Cola sells milk, lattes and coconut water. The Atlanta-based group and rival Pepsico have, over the past few years, been trying to expand their businesses as people consume less fizzy drinks because of health concerns. Just a fortnight ago Coca-Cola — which has been touting itself as a total beverage company — announced a big fat deal, saying it would buy Costa Coffee for $5bn. Perhaps sooner than you think, Coca-Cola will sell a marijuana-infused drink.
No, I’m not smoking something.
The company is reportedly mulling a wellness or recovery-type drink infused with cannabidiol (CBD), a non-psychedelic ingredient in marijuana that treats pain but doesn’t get you high or intoxicated.
There is growing acceptance for the use of CBD for easing inflammation, pain and nausea. Preclinical studies suggest it also has anti-seizure effects. There is a growing trend of established companies, from booze players to Big Pharma, moving into the marijuana industry as legalisation spreads.
Bonnie Herzog, an analyst with Wells Fargo in New York, says that while cannabis remains illegal at the federal level in the US (only some states have legalised it), she believes there could be long-term potential for companies like Coca-Cola to capture some of this potentially lucrative market. The total US cannabis industry is a $50bn annual market — that’s nearly half the size of the $117bn for US beer sales.
"Cannabis is a huge global opportunity," she says in a note, adding that within 15 years it could be worth more than $200bn.
Heineken’s craft beer Lagunitas has a drink infused with CBD and tetrahydrocannabinol (THC), marijuana’s active ingredient, which does produce a high. Meanwhile, Molson Coors is making drinks with Quebec-based cannabis producer Hydropothecary and Corona owner Constellation Brands invested $4bn into Canopy Growth.
And Diageo, maker of Guinness beer, is said to be holding discussions with at least three Canadian cannabis producers about a possible deal.
Beer sales have been flat for a few years now as more consumers drink wine and spirits. Growth has also been slowing for craft brewers as the market reaches saturation.
High-er
Coca-Cola is said to be in talks with Canada’s third-largest pot company, Aurora Cannabis.
"We are closely watching the growth of nonpsychoactive CBD as an ingredient in functional wellness beverages around the world," a Coca-Cola spokesman told Bloomberg.
"The space is evolving quickly. No decisions have been made at this time." Aurora is listed on the Toronto Stock Exchange, has a market value of C$8.7bn — and is one of Canada’s biggest "pot stocks".
The country is gearing up for October 17, when it plans to become the first Group of Seven nation to legalise marijuana for recreational use.
For its part, Aurora said it wouldn’t discuss business development initiatives until they were finalised, but added: "Aurora has expressed specific interest in the infused beverage space, and we intend to enter that market."
Coca-Cola launched 500 new products and variants in 2017.
This included whey shakes in Brazil and cucumber-flavoured Sprite in Russia. Perhaps a dagga drink isn’t so much of a stretch.
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