Bernstein ‘cautious’ over potential of cannabis infused beverages, while Arcview and BDS Analytics predict ‘flood of mainstream investment’
According to BDS Analytics’ GreenEdge service, most cannabis-infused edibles sold in the US are in the candy and chocolate categories, with sales of edibles reaching $988m in 2017, led by candy ($405m) and chocolate ($193m). General foods accounted for $122m, beverages for $58m, and pills, tinctures and other edibles for the remaining $209m.
“Legal cannabis markets in the US and soon Canada [which has just legalized cannabis nationwide], will be the incubators of this nascent cannabis sub-category. Edibles spending in those two markets topped $1bn in 2017 and is forecast to grow to more than $4.1bn by 2022.”
Arcview Market Research, BDS Analytics predicts ‘flood of mainstream investment in cannabis in general and the edibles sector in particular’
In a report from Arcview Market Research in partnership with BDS Analytics, ‘The Tasty Future of Cannabis Edibles,’ the authors are very bullish about the edibles market, and predict that Constellation Brands’ recent US$4bn investment in Canadian cannabis producer Canopy Growth Corporation “is likely just the start of a coming flood of mainstream investment in cannabis in general and the edibles sector in particular.”
The report adds: “As the edibles business grows and regulatory fears in the US ease, the pace of intra-industry mergers and outside acquisitions will increase exponentially. In edibles that trend will likely be led by major public companies already dominant in their existing markets.”
Bernstein: ‘Cannabis infused beverages maybe be an interesting product in search of a non-existent or very small un-met consumer need’
In a new report from analysts at Bernstein, ‘Scoping the size of the US cannabis market,’ the authors also note that big beverage companies are “looking closely” at cannabis infused beverages, adding:
“One has already leapt in [Constellation Brands and Canopy]; others are dipping their toes [Molson Coors is entering a JV with Canadian cannabis producer Hexo, and Heineken-backed Lagunitas has just launched THC-infused sparkling water]; and most are watching very closely and waiting to see how the market evolves.”
But they add: “We are very cautious/sceptical about the potential for cannabis infused beverages. We … suspect cannabis infused beverages maybe be an interesting product in search of a non-existent or very small un-met consumer need.
“There may well be an initial surge of trial. But we believe that most consumers will ultimately decide to consume their preferred refreshment drink separately from their legal high.”
Recreational cannabis and the law
Currently, more than 30 US states and the District of Columbia have legalized the use of medical marijuana, while recreational use has been legalized in 10 states (Alaska, Colorado, Nevada, Oregon, Washington, California, Maine, Massachusetts, District of Columbia, and Michigan - where voters approved a ballot measure to legalize recreational use of marijuana on Tuesday; voters in North Dakota, however, rejected a similar measure).
Were recreational use of cannabis made legal in all 50 states and the average adult consumed somewhere between the apparent average Coloradan and the average Washingtonian, that would equate to a retail market of in the order of $70bn, says Bernstein. “However, the data from the early-adopter states are almost certainly inflated by out-of-state tourists and informal exports… So perhaps $40bn is a better estimate.”
But it added: “There could be upside to our estimates if newer delivery mechanisms such as vaping or edibles attract new consumers. However, we note that consumption appears to be plateauing in the early adopter states despite rising penetration of the new forms of consumption.”
Legal edibles... vs CBD
While it is legal to sell marijuana (which contains THC, and will get you high) in foods and beverages for recreational use in several US states, the FDA has stated unequivocally that CBD (cannabidiol), a fraction of the cannabis sativa plant currently being marketed in scores of supplements and some foods & beverages, is not a legal food or supplement ingredient in any US state, regardless of whether that state has approved recreational cannabis use.
Speaking at the recent Council for Responsible Nutrition (CRN) conference in Dana Point, CA, Steven Tave, director of the FDA’s Office of Dietary Supplement Programs, said: “Just because we haven’t taken enforcement action people seem to think it [CBD] is OK. [But] anyone who thinks it is lawful is mistaken.”
(Read more HERE at our sister site NutraIngredients-USA.)
What is the regulatory status of CBD in food and beverage products?
If you ask the FDA or the DEA if CBD (cannabidiol) is permitted in foods, beverages and supplements, the answer is a pretty unequivocal NO. If you ask the scores of companies currently selling it in everything from CBD-infused soda to smoothie kits, the answer is YES. So what’s going on?
Get the full details HERE.
Coca Cola: 'We have no plans to get into CBD at this stage'
Vivien Azer, senior research analyst, Cowen & Co: “So last month, there was public commentary that you guys are closely monitoring the non-psychoactive CBD category. So, James, I was hoping that you could expand on that comment and discuss what, if any, regulatory changes you would need to see to become more interested in the space in the US and also internationally? Thanks.”
James Quincey, president and CEO, Coca-Cola: “Well, I think that's a simple one. We don't have any plans at this stage to get into this space. So that's kind of where we are.”
Source: Coca Cola, Q3 2018 earnings call, October 30, 2018
Dirty Lemon: 'We’re discontinuing our CBD elixir'
According to BevNET, functional beverage brand Dirty Lemon plans to discontinue sales of its CBD-infused SKU, +cbd until the regulatory framework around hemp-derived CBD is clarified on a federal and state level, with CEO Zak Normandin telling the publication that it now has “a better understanding of the significant legal and operational challenges that this ingredient poses for all food and beverage companies.”
FDA: We have not received or reviewed any GRAS notices for CBD
"FDA has neither received nor reviewed any GRAS notices for the use of CBD Oil in foods. Furthermore, as we have stated on our webpage, FDA and Marijuana: Questions and Answers, we have concluded that it is a prohibited act to introduce or deliver for introduction into interstate commerce any food to which CBD has been added.
"We have also concluded that CBD products are excluded from the dietary supplement definition, and therefore cannot be properly classified as dietary supplements."
FDA spokesperson in an emailed statement to our sister site NutraIngredients-USA, November 5, 2018
