Cannabis Drinks Are Projected To Make $2 Billion This Year
More and more people want their drinks cannabis-infused. That's one message entrepreneurs are finding easy to swallow.
The year 2020 may go down as the worst in memory, but not for cannabis beverage manufacturers.
According to a report by Prohibition Partners, the global cannabis drinks market will be worth $1.82 billion by the end of the year. That number is driven by consumers looking for cost-friendly relief from the current COVID-19 pandemic.
Why are so many obeying their thirst?
“When facing an economic crisis, consumers will be more willing to buy less costly luxury goods," says Stephen Murphy, Managing Director of Prohibition Partners. "Cannabis-infused drinks are an ideal example of this and Prohibition Partners has found that cannabis products are expected to benefit from this period of self-isolation."
The stockpile effect
Consumers are stockpiling cannabis products in a bid to ensure that their supplies are secured indefinitely. As part of the “home entertainment line-up” in regions where cannabis is legal, beverages can expect to benefit from this trend in hard times to watch more television and spend more on little extras for their in-home leisure. The current stressors of 2020 have already proven to be a boost to cannabis-based products. Despite the current inevitable economic downturn, cannabis is still set to record impressive growth as consumers look for products to help them relax and de-stress and as the most popular format, drinks will likely be the greatest beneficiary.
"Being a firm believer that infused-beverages are the best and most enjoyable format for cannabis consumption, I'm not surprised," says Macai Polansky, founder of Cannabis Beverage Association and co-founder of Spacestation. "Beverages are the most ubiquitous consumer packaged good found around the world. Everyone on this planet drinks something and in most social situations, a beverage will be found in peoples' hands. I look forward to the day that cannabis-infused beverages can be consumed at bars and restaurants and are more widely available to the masses."
Consumer demand is rising
The report finds that one in four consumers or would-be consumers of other cannabinoid-based products would be willing to try cannabis-infused drinks, and 28 percent of people who have already tried infused beverage consumers say they intend to buy more infused consumer goods in the coming three months.
Claire Birks, Prohibition Partners Senior Analyst says “The global drinks market may be large but overall industry growth is slow with some analysts forecasting annual growth at around just 3%. Our research has found that cannabis-drinks, however, are poised for much bigger growth and point towards an almost 45% compound annual growth rate for the cannabis-infused segment of the drinks industry.”
Says Murphy, “We are on the cusp of a drinks revolution, for hundreds of years, legal socializing has either involved alcohol, or sobriety; outside of caffeine and nicotine, ultimately you either got drunk, or you didn’t. The emerging cannabis drinks market is one of the most exciting sectors within the beverage industry; cannabis infusion will truly disrupt the drinks market and become a highly lucrative source of revenue for those who embrace it."
Aaron Silverstein, Managing Director of BevZero told Green Entrepreneur that “Cannabis beverage products that can replace alcoholic drinks, such as wine or beer, are more necessary right now during the COVID-19 pandemic than ever before."
He pointed to a statement issued by The World Health Organization indicating that alcohol use could weaken the immune system, and that heavy alcohol use increased the risk of some of the most severe complications of COVID-19.
For this reason, consumers are turning to beverages like House of Saka’s non-alcoholic cannabis-infused Chardonnay and Cann Social Tonics to replace their alcohol consumption with cannabis options that are familiar and meet many of the same needs.
Drinking isn't smoking
As a respiratory illness, COVID-19 has made people think twice about how they choose to consume cannabis. People are avoiding smoking and vaping in favor of other formats such as edibles, including drinks. Furthermore, governments throughout the globe will be searching for ways to bolster flagging economies and cannabis-infused beverages have the potential to deliver.
“Consumer demand has driven exponential growth in new and novel beverage categories like kombucha, flavored sparkling waters, and functional teas. Cannabis beverages are an obvious extension of this industry-moving consumer trend. I look forward to driving the same explosion in cannabis beverages that we’ve seen with past hot beverage trends in the grocery aisles, ”said Judy Yee - CEO / Co-Founder of KZen
Stress drinking is real
Prohibition Partners has also found that working parents have been particularly responsive to the beverages; 2020 has seen them take on the roles of worker, teacher, and parent all at once. This may explain why 70 percent of people who reported that they are likely to buy more infused products in the coming three months, have children under the age of 18. Parents may need an outlet to provide a form of escapism or herbal self-medication during the crisis. This is likely to also be a key reason that more than half of those who intend to purchase more cannabis-infused drinks in the coming three months are ages 25–44.
Federal US Government Statistics from April show a rise in stress-drinking directly resulting from the global pandemic and this has been mirrored across much of the world. Furthermore, a leading professor of Health at the University of Boston has warned that a spike in alcohol use disorders is on its way owing to a shift in alcohol purchase and consumption habits during the crisis.
"We live in a society that loves drinks. Infused beverages are attractive to the consumer because the consumption process is so familiar. Now available in low-dose options, consumers can have a sessionable experience in a social setting much like alcohol, but without the hangover. Within the category, there are also many more options to choose from. Whether you're looking for infused coffee, cannabis-infused wine, or a cannabis sparkling seltzer, there's something for everyone," said Jamie Evans, Founder of The Herb Somm and author of The Ultimate Guide to CBD: Explore the World of Cannabidiol.
The emerging cannabis drinks segment, however, could lessen that impact. Consumer research conducted by Prohibition Partners has found that four in 10 consumers who have or intend to purchase cannabinoid-infused beverages do so as a replacement for other intoxicating substances.
"The cannabis beverage category has developed rapidly over the past several years and is a real game-changer in the consumer packaged goods space," says Ben Larson, CEO of infusion technology company, Vertosa. "In these extremely challenging times, infused beverages offer an appealing, approachable, and affordable alternative to alcoholic beverages. And thanks to cutting-edge technology, there are also more sophisticated and high-end varieties of cannabis beverages than ever before, from wine to beer to cold brew coffee to fresh juice to sparkling water."
Larson predicts that "by the end of the year, you can expect to see notable consumer brands from beer, spirits, coffee, energy drinks and more bring exciting new products to market."
Room for improvement
Cannabis drinks are starting to get the needed boost, in part, because of the supply chain improving each month and the attention that COVID-19 provided. "The light has shined on our little but growing space in the industry and I think it's going to help cannabis beverages outpace any projections that are currently out there,” says Geoff Doran, Founder & CEO of Van Doran Brands. “There's still a lot of room for improvement though. If you walk into 10 dispensaries in California, you will quickly realize that our space doesn't have the proper shelf space we need such as sizeable refrigerators or retail real estate to help us find our way into the consumer's hands. We are getting there with more brands coming on board though. We will see a massive growth event this summer. After all, it's bound to happen, we have been imbibing/socializing with drinks for centuries, it's just time to imbibe with a different vibe."