Coca-Cola Dipping Into the Cannabis Infused Drink Market
FILE–In this Aug. 8, 2018, file photo, bottles of Coca Cola sit on a shelf in a market in . [+] Pittsburgh. The Coca-Cola Company says that it’s “closely watching” the growth of the use of a non-psychoactive element of cannabis in wellness drinks. (AP Photo/Gene J. Puskar, file)
Long gone are the controversial days of Coca-Cola infusing cocaine into its popular product, now they’ve turned their attention to cannabis. The dominant soft drink maker may have the chance to make cannabidiol (CBD), the non-psychoactive chemical found in marijuana plants, infused drinks for the masses.
The Breakdown You Need to Know
Nine states and Washington, D.C. legalized recreational marijuana this year as of January, and Coca-Cola is hoping that the Farm Bill will spread the green love to all 50 states. If the Farm Bill passes, it will remove hemp as a controlled substance which CBD can be derived from, therefore making the plant legal under federal law.
With the legalization of hemp investment opportunities in the industry would become nearly boundless. Companies selling the product would get access to more financial development, that’s currently not an option because of its classification as a controlled substance. This would open up the floodgates for companies Coca-Cola would be able to work with.
Cannabis research firm Brightfield Group, recently raised its projections for the CBD industry , finding it could reach $22 billion in market size by 2022. Coke investors are probably very welcoming of this news as a strong revenue stream that will have a lot of upside. If the company is able to capture just 10% of the projected market size, it would bring in $2.2 billion in revenue by 2022.
This line of thinking follows their investments into other alternative drinks as the consumption of soda continues to decline. CultureBanx reported in an effort to get in on the natural sports drink wave, they became the second-largest investor in Kobe Bryant’s BodyArmor drink. The investment came with a significant windfall for the former basketball star, one of the company’s early investors, making his initial 10% investment worth $200 million in just five years.
Infused Beverage Mindfulness
Coca-Cola owns more than 500 brands around the world and reported annual revenue of $35.4 billion in 2017, down 15.5% from the same time last year. Weak sales and the ever changing consumer palate, has forced the company to find growth in other areas. They have been making investments in their international markets along with new beverage ideas, such as an alcoholic offering that’s only available in Japan.
BNN Bloomberg reported the company is in “ serious talks ” with Aurora Cannabis to develop CBD-infused beverages. Coca-Cola and Aurora would likely develop beverages that will ease inflammation, pain and cramping.
In regards to all the speculation around Coca-Cola’s plans to venture into this market they stated “We have no interest in marijuana or cannabis. Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly. No decisions have been made at this time.”
Aurora is just one of several companies Coca-Cola has discussed developing a cannabis drink strategy with. Executives have held high-level talks with Leamington, and Aphria two months ago, according to the publication.
Long gone are the controversial days of Coca-Cola infusing cocaine into its popular product, now they’ve turned their attention to cannabis. If the company is able to capture just 10% of the projected market size, it would bring in $2.2 billion in revenue by 2022.