Canopy Growth Shares Why It Got into U.S. CBD Beverage Game
One of Canada’s licensed producers (LPs), publicly traded Canopy Growth, which has infused and sold beverages in Canada over the past year, is now bringing its beverages below the border to the U.S. It’s starting with flavored cans of sparkling water with 20 milligrams of CBD that it’s marketing under the Quatreau brand.
“The North American market potential for CBD-infused beverages is extremely promising, and with the continued growth the industry is seeing, we know it has the potential to really disrupt other traditional beverage formats, from sparkling water and soda to beer, wine and spirits,” said Tara Rozalowsky, Canopy’s vice president of beverages and edibles.
Rozalowsky said Canopy sees the opportunity to enter the U.S. CBD beverage space due to its large size, experience manufacturing hemp products, ability to scale, and understanding of industry regulations.
“Since the launch of Canopy’s first THC-infused beverage in Canada in early 2020, we held the No. 1 share position at 36.1% for overall sales in 2020,” Rozalowsky said. “Our Tweed, Deep Space and Houseplant THC-infused beverages were 3 of the top 5 SKUs [stock keeping units] in calendar Q4, and since the launch of Quatreau, our first CBD-infused beverage in Canada, it has maintained the No. 1 position in the CBD-infused beverage category overall.”
Rozalowsky said Canopy sources its hemp from farmers in New York’s Southern Tier, Oregon and California, and that the company “will continue to work with those communities and select wholesalers in the market for future needs.”
Canopy and Constellation Brands, the company that has a roughly 39% stake in Canopy and owns beverage brands such as Corona and Modelo, looked at consumer insights to determine market potential, Rozalowsky said. “[W]e identified top key differentiators we could own: The highest CBD potency at a lower price point, zero sugar and low calories made with pure CBD isolate,” she said.
Carbonated water and natural flavors are some of the other components that Rozalowsky said make Quatreau “a refreshing and effervescent zero-sugar drink with a consistently potent effect.”
“Quatreau aims to redefine consumers’ relationship with energy and productivity by replacing the stimulants, sugar, and artificial ingredients found in most sodas, coffees, and energy drinks with a clean, balanced, and sessionable alternative,” Rozalowsky said.
Canopy’s launch of CBD beverages in the U.S. follows its announcement of plans to manufacture and sell THC beverages in U.S. state-legal markets. “Initially, as a cannabis company, our focus was on THC beverages in Canada, which we’ve rolled out very successfully in that market,” Rozalowsky said. “We plan to begin bringing our THC-infused beverages into the U.S. this summer through our partnership with Acreage.”
Canopy can become a leader in the U.S. CBD beverage category, Rozalowsky said, citing 2020 BDSA data that states that the space’s top three brands represent about 12% of market share. The total U.S. retail market is expected to grow to $495 million by 2022, she said, again citing BDSA.
“The CBD-infused beverage category is one of the fastest-growing and high-potential sectors in our industry, and a key part of our strategy for capturing U.S. market share,” Rozalowsky said. “As a company, we are actively investing budget and resources into innovation with the development of a best-in-class innovation department whose sole focus is to create the future of cannabis to improve the lives of consumers.”