Cannabis beverages: A growing thirst for functional highs

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  Quantumrun Foresight
• April 1, 2022

Insight summary

The emergence of cannabis-infused beverages, driven by the legalization of recreational cannabis use in parts of North America, has created a new and rapidly growing market that caters to various age groups and health-conscious consumers. This trend has led to the development of diverse products, from large brewery companies to niche craft breweries, with flavors and benefits that resonate with modern consumer values. The potential long-term impacts of this industry include shifts in social norms, changes in government regulations, diversification of the beverage market, new opportunities for entrepreneurs, and the need for sustainable practices in production and cultivation.

Cannabis context

The legalization of the recreational use of cannabis in Canada and 18 states in the US has led to a new category of beverages containing regulated doses of cannabidiol (CBD) and tetrahydrocannabinol (THC), the primary psychoactive ingredient in cannabis. The global market size of this emergent industry is forecasted to reach USD $23.6 billion by 2025. With more than 30 million CBD users in the US, the introduction of cannabis-infused beverages regarded as palatable, healthier, and more socially acceptable than smoking cannabis or consuming edibles has stimulated the appetite of businesses and consumers.

Alcohol industry giant Molson Coors has entered this increasingly competitive landscape through two joint ventures, each producing a CBD beverage and a THC beverage. Overall, there has been a steady rise in new products that focus on the functional benefits of cannabis for consumers. At the same time, these products provide an exciting range of flavors, such as Raspberry Hibiscus and Cranberry Sage, which evoke trendy aspirations of organic wholesomeness. 

Rhythm, a new line of CBD seltzers, are vegan, gluten-free, non-GMO, keto-friendly, low-calorie, zero-sugar, and do not contain artificial sweeteners. These products ultimately resonate with health-conscious consumers who prioritize functional performance. From sparkling drinks to spritzers, mocktails, and vials that support micro-dosing, cannabis beverage consumers are becoming increasingly spoilt for choice in this expanding category.

Disruptive impact

The increased consumption of cannabis beverages across various age groups, including Gen Z, Millennials, and Baby Boomers, is a trend that reflects a shift in societal values and health consciousness. As more people seek alternatives to alcohol and become aware of the potential health benefits of cannabis, the industry is likely to grow. Eliminating the stigma around cannabis through consumer education is a key factor in this growth, as it fosters a more accepting environment. Technological strides in making cannabis more water-soluble and enabling more reliable dosages have also played a role in building trust and transparency with consumers.

The potential approval of cannabis by the Food and Drug Administration (FDA) could significantly change the landscape of the industry. By lifting restrictions on distribution across state borders, the FDA would open new avenues for mainstream retailers to embrace cannabis beverages. This shift would likely lead to greater acceptance and integration of these products into everyday consumer life. However, the uncertainty around the timing of these certifications and the exact nature of the FDA's involvement in defining THC and CBD products adds a layer of complexity to the future of the market.

Increased competition in the cannabis beverage market is another factor that may shape its long-term impact. As more companies enter the field, current premium retail prices are likely to decrease, making these products more accessible to a wider range of consumers. Governments and regulatory bodies may need to adapt to this trend by implementing clear guidelines and regulations to ensure safety and quality. For businesses, understanding consumer preferences and staying ahead of technological advancements will be essential in maintaining a competitive edge in this rapidly evolving industry.

Implications of cannabis beverages

Wider implications of cannabis beverages may include:

• A short-term increase in recreational drinking as consumers experiment with an entirely new type of beverage during social outings, leading to a temporary boost in sales for both large and small beverage companies.
• Large brewery companies creating new product lines that include cannabis, while numerous craft breweries focus entirely on niche cannabis beverages, leading to a diversification of the beverage market and new opportunities for entrepreneurs.
• Various new public health campaigns featuring moderating cannabis beverage consumption, leading to increased awareness and responsible consumption practices among the general public.
• The spontaneous development of new slang, social customs, and activities centered around cannabis beverage consumption, leading to a cultural shift and the emergence of new social norms and traditions.
• The potential of some consumers switching from alcoholic beverages to cannabis beverages for perceived health reasons, leading to a shift in consumer behavior and potential long-term changes in the alcoholic beverage industry.
• Governments implementing regulations and standards specific to cannabis beverages, leading to a more structured and safe market that protects consumers and ensures quality control.
• The integration of cannabis beverages into mainstream retail, leading to changes in marketing strategies and retail layouts, and possibly influencing consumer shopping habits.
• Potential environmental implications as the production of cannabis beverages grows, leading to the need for sustainable farming practices and waste management in the cultivation and processing of cannabis.
• A shift in labor demands within the beverage industry as new skills and expertise are required to produce and market cannabis beverages.
• Economic implications as the taxation and regulation of cannabis beverages may provide new revenue streams for governments.

Questions to consider

• How do you think the consumption of cannabis beverages will affect the broader society?
• Do you think cannabis legalization, and ultimately greater access to cannabis-related products in the mainstream, will reduce the abuse of cannabis, particularly among younger generations?