The Future of Cannabis Beverages: The alcohol category is about to get some serious competition
In the face of shrinking alcohol and soft-drink consumption worldwide, the growing new trend in beverages is cannabis drinks. The category is hot and getting hotter. With more states legalizing recreational cannabis, the market is experiencing an entrepreneurial explosion of cannabis-infused beverages. Companies needing to market new cannabis and hemp drinks will need a good understanding of the various nuances of this emerging product category. With that in mind, The ViViD Team offers you this overview of the latest challenges and trends in cannabis and hemp drink product development.
According to financial services analysts at Canaccord Genuity, in just four years’ time, the market for cannabis drinks in the US could reach $600 million, with beverages containing CBD estimated to reach $260 million. By 2022 drinks containing THC are estimated to reach $340 million. This surpasses the growth of any other category of retail cannabis and hemp products. Currently, cannabis drinks including non-alcoholic beers, seltzers, fruit punches, and teas make up approximately 1.5-3% of the larger cannabis and hemp market. The market share is small – but expected to rise.
While cannabis and hemp drinks are not expected to surpass alcoholic drinks in popularity, there is a rising segment of the population that is drinking less alcohol, particularly in the Z Generation, and nearly 1/3 of consumers would consider replacing drinks containing alcohol with those containing THC or CBD. What’s more, 30-40% of people who admit they are likely to have a cannabis drink in the next year also say they plan to cut down on their alcohol consumption if they haven’t already. Over 1/4 of people surveyed also say that they drink less alcohol when they consume cannabis.
It’s apparent that cannabis drinks pose a legitimate and viable threat to alcoholic drinks. In fact, according to Prohibition Partners’ “Disrupting Drinks” report, by 2024 the cannabis-infused drink market is anticipated to increase to a whopping $4 billion. Cannabis drinks threaten alcoholic drinks, in part, due to their mood-enhancing qualities. They appear to fill a similar role to NA-style “mocktails.” They are marketed as being “functional” beverages, which is something that cannot be said for alcohol. While cannabis drinks are not threatening to disrupt the NA-drink market, they don’t look doomed to the realm of a niche product either.
CBD vs. THC
A big factor in the success and proliferation of different cannabis drinks is whether they contain CBD or THC as their primary active ingredient. When trying to decide between the two for the basis of your own cannabis and hemp drink product development, consider both the effects you’d like the drink to produce and the ways you’re planning to market it. If the drink contains THC, you will be more restricted in terms of where and to whom you can sell it. Choosing to make a beverage out of hemp-based CBD, on the other hand, gives you more flexibility in the marketplace, as you can sell it through general retailers.
THC beverages are typically intended to produce a mind-altering effect, or “high” and they are also used to provide therapeutic benefits. Users typically appreciate the way THC drinks provide a discreet, familiar, and safe way to consume cannabis in public. CBD provides many of the same therapeutic benefits without the psychoactive component. CBD is a powerful anti-inflammatory agent and mood enhancer. CBD drinks offer consumers a class of functional drinks that appeal to people based on attributes of health and wellness. What’s more, because CBD drinks are non-intoxicating, they can be used while working, caring for others, commuting, and working out.
Because hemp-based products have a better chance of passing legally on a federal level than cannabis THC-based products, CBD drinks have a better chance of making a quicker and fuller entry into the consumer marketplace. When the federal government does finally legalize THC cannabis, these beverages will continue to be sold in licensed dispensaries while mainstream retailers determine their role in this category. Currently, at the federal level, CBD in food and drink is still illegal. The 2018 Farm Bill legalized hemp, but the legal status of hemp-derived cannabidiol remains in limbo. This is mainly because CBD can be derived from hemp or cannabis, but if a hemp plant contains more than 0.3 percent THC (the active “high” ingredient in marijuana) it is then technically a “marijuana” plant. It’s confusing, we know, and implementing much-needed regulations could take years.
No matter CBD or THC cannabis the beverage category is shifting to include cannabis offerings. The trend is real and impactful. With 32% of consumers willing to replace alcohol with cannabis beverages, if you’ve been considering the development of a new cannabis beverage, it’s time to commit to a plan and bring your idea to fruition.
Successful Steps for a Cannabis Beverage Development
Successful commercialization of a cannabis beverage involves many steps here are a few to consider:
- Market research – Understand your market, including its tastes, its wants, and its needs, so you can deliver it the product it wants.
- Dosing – The strength of your drink will be critical to determining who consumes it and when and how much of it they consume. Plan to implement necessary quality systems in order to ensure the product you produce matches its claims.
- Sourcing the extract – Seek only the best quality sources of the extracts you will use in your products. If you’re promoting organic hemp-based CBD extract in your drinks, for example, be sure you source your CBD extract from organic hemp suppliers. Speak with the supplier and conduct a risk analysis to apprise yourself of all the potential risks associated with using your choice of source extract, including pesticide residue, residual solvents, heavy metal uptake, mycotoxin, and microbial. See if a COA (Certificate of Analysis) is available for any given test you have conducted.
- Determine methodology – As cannabis and hemp extracts are oil-soluble, they mix easily into oil-based drinks. If, however, most of the content of your drink is water, you will need to determine how to mix the water and oil together in your drink. This could involve using a homogenizer or emulsifier.
- Develop flavor profile – Depending on your target audience, you’ll need to decide whether to offer more full-spectrum cannabis and hemp flavor profile in your drinks or a low-flavor profile, perhaps masked by a familiar flavor like berry or citrus.
- Design packaging – You have a choice of packages to use for your cannabis and hemp drink, the most common being plastic and glass. Whichever packaging material you choose, you will need to design it in a child-resistant manner. Packaging manufacturers today are incorporating durability, protection, and presentation into cannabis and hemp drink package designs.
As in many markets, sales and commercialization of cannabis products surged during the start of the COVID-19 pandemic as people saw the need to stockpile their supply. These stockpiles often included cannabis beverages. As the world slowly works its way back to normal, The ViViD Team believes there is good reason to wonder if the infusion of interest in cannabis and hemp drinks during the pandemic will only fuel further interest and excitement for the industry once social restrictions have lessened or disappeared. To capitalize on this opportunity today, look into how The ViViD Team can help you with your cannabis and hemp drink product development.
Key components The VIVID Team focuses on – especially related to edibles and beverages:
- Local and State Cannabis Rules – Regulation and Compliance
- Good Manufacturing Practices
- Food Safety
- Dosing, especially homogeneity
- Product ideation
- Ingredient sourcing
- Acquisition advisement
It’s an exciting time to be a food scientist and involved in food development. New food and beverage trends, technologies, and opportunities are continually driving our company and the industry forward. We believe cannabis-infused drinks are poised to become a major player in the larger beverage market. We’ve been doing food product development for over 30 years and this latest trend towards integrating hemp, CBD, and cannabis with quality foods has us very excited. If you’re looking for an enthusiastic and knowledgeable partner, we hope you’ll get in touch with The VIVID Team.