Who Will Become the LaCroix of CBD Beverages -- CFN Media
SEATTLE, Nov. 19, 2018 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE – CFN Media Group (“CFN Media”), the leading agency and financial media network dedicated to the North American cannabis industry, announces publication of an article covering The Alkaline Water Co. and their entry into the CBD-infused beverage market. Most people have heard of LaCroix—the brand is the subject of a viral R&B single and even a popular t-shirt line. In 2017, the flavored sparkling water brand reported net sales of over $800 million with a growth rate that was nearly four-times greater than the sparkling water category.
With the legalization of cannabis across a growing number of states, CBD-infused beverages have become increasingly popular among consumers. Google Trends notes that the search term “CBD Water” has surged in popularity over the past two years. Many consumers are eager to realize the potential health benefits of CBD in a convenient beverage format.
Many alcohol giants have also taken an interest in the THC side of the space. Constellation Brands Inc. boosted its equity stake in Canopy Growth Corp. to 38 percent earlier this year at a cost of C$5 billion, while Molson Coors Brewing Co. formed a joint venture with The Hydropothecary Corporation around the same time to develop a line of non-alcoholic cannabis-infused beverages.
But, what companies are best positioned to potentially become leaders in the space?
Alkaline Water Builds a Moat
The Alkaline Water Co. (TSX-V: WTER) (OTCQB: WTER) is quickly becoming a leader in the CBD water space. Building off the success of its flagship Alkaline88® bottled water brand, the company began working on a CBD water product using the same proprietary Electrochemically Activated Water (ECA) system it has employed to create its signature 8.8 pH Alkaline88® without the use of any chemicals.
The company recently reported revenue that soared 78 percent to $8.6 million during the fiscal second quarter after launching its hemp-derived CBD-infused Alkaline88® water product. With growing distribution in Walmart and CVS, the company has the potential to reach a wide range of new customers with these new products.
The company’s newly launched hemp-derived CBD infused Alkaline88® water will initially be available in the 500 ml size with a dosage of 10 mg of CBD per bottle. By leveraging Alkaline88’s existing infrastructure and distribution, the company can immediately roll out products across 35 states and the District of Columbia under 20 well-known banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs.
Between 2014 and 2018, the company’s fiscal year end revenues have grown from $600,000 to almost $20 million. The company is projecting $40 million by the end of fiscal year 2019. The company has averaged 435 percent growth since 2014 and is projecting a 102 percent year over year increase in 2018. These figures are significantly higher than many development-stage opportunities just starting out in the CBD water segment.
The company also has plenty of growth capacity. Through its co-packing and development agreement with ANP, the company has access to an FDA-registered, cGMP compliant facility that has been certified by both the International Center for Cannabis Therapy and the National Sanitation Foundation. The team also has a history with cannabinoid and other plant extraction techniques that could provide it with a formidable advantage.
THC Remains a Question Mark
The alcohol industry has started staking its claim on the THC side of the beverage business through acquisitions and joint ventures, but consumers have been moving away from “big alcohol” and toward craft beer and spirits over the last 20 to thirty years. This dynamic could lead to a more fragmented market for recreational beverages designed to deliver a high.
There are many smaller companies that aim to produce craft cannabis beverages. For example, Province Brands of Canada, a craft beer producer, developed the world’s first beer created from cannabis. Its patent-pending process creates the beers using the parts of the cannabis plant that would otherwise have no commercial value, such as the stalks and stems. The company aims to establish the first cannabis brewery in Canada.
But as with craft beer, the future of the craft cannabis beverage industry may be hyperlocal with existing breweries teaming up with existing dispensaries to create new concoctions. On top of that, the regulatory framework around THC-infused beverages is inconsistent to non-existent, meaning that bringing these products to market on a large scale is not practical. For now, CBD-infused beverages offer a much larger market opportunity
Building Exposure to the Space
Investors have many options to build exposure to the cannabis beverage space, including cannabis companies and existing beverage companies. The Alkaline Water Co. (TSX-V: WTER) (OTCQB: WTER) offers a pure-play in the space with its focus on CBB-infused water, while its existing infrastructure could de-risk the launch of the new products and help it gain near-term market share.
For more information, visit the company’s website at www.thealkalinewaterco.com.
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