CBD Infused Drinks Offer Consumers a New Healthy Alternative

FinancialBuzz.com News Commentary

NEW YORK, July 2, 2019 /PRNewswire/ -- Customers around the world consume sugary drinks on a daily basis. While the statistics on the daily average consumer sugar intake are astonishing, the number has steadily fallen over the past several years. For instance, in Canada, adults over the age of 19 have drastically decreased the amount of sugar they ingest as, according to a study by Statistics Canada, Canadians aged 19 or older consumed 85 grams of sugar daily in 2015, cutting down from 93 grams in 2004. While the daily intake can be comprised of other factors such as foods, the study suggested sugary drinks were the top sugar source for all Canadians. Nowadays, consumers are becoming more aware and cautious about what they put in their bodies. And in turn, consumers are beginning to transition towards health-beneficial and functional beverages instead of ones packed with sugars. For instance, cannabis-infused beverages are gaining momentum particularly quickly within the beverage industry. Specifically, the CBD or cannabidiol compound found within the cannabis plant is being infused into beverages to create a therapeutic and functional drink, as studies have linked CBD to treating a range of health benefits such as insomnia, anxiety, seizures, inflammation, and chronic pain. CBD is more commonly being used as opposed to THC or tetrahydrocannabinol because it does not provide consumers with psychoactive effects. Instead, two compounds offer similar health benefits, despite having different biological makeups. While the legality of CBD-based products was unclear prior to last year, the market has swiftly gained traction following the passage of several historic bills. Notably, the passage of the U.S. Farm Bill paved the way for the hemp-derived CBD industry's growth, while Canada's legalization of adult-use cannabis also greatly contributed to the industry. Lastly, Canada's upcoming legalization of cannabis-infused edibles in October of this year is expected to propel the industry even further. According to data compiled by Mordor Intelligence, the global cannabis market was valued at USD 14.5 Billion in 2018. By 2024, the market is projected to reach USD 89.1 Billion while registering a robust CAGR of 37% during the forecast period from 2019 to 2024. BevCanna Enterprises Inc. (CSE: BEV), Constellation Brands, Inc. (NYSE: STZ), Anheuser-Busch InBev SA/NV (NYSE: BUD), Molson Coors Brewing Company (NYSE: TAP) (TSX: TPX), Tilray, Inc. (NASDAQ: TLRY)

The CBD industry has become an explosive marketplace over the past year. Following the passage of the U.S. Farm Bill, consumers gained the right to freely purchase CBD-based products at their local convenience stores and pharmacies. Overall, CBD is becoming more and more prevalent in the daily lives of consumers because of the substantial investments that many large corporations are pouring into the industry. RBC Capital Markets analyst Nik Modi suggests that corporations are entering into the cannabis industry to find a new source of revenue as their main businesses continue to slow down. For example, alcohol sales have steadily declined over the past several years and according to data by the Wall Street Journal's industry tracker IWSR, U.S. alcohol volumes dropped by 0.8% in 2018, slightly steeper than 0.7% in 2017. Specifically, beer volume was hit the hardest, with volumes down 1.5% in 2018 compared to a decline of 1.1% in 2017. The dwindling sales have prompted beverage corporations to find new streams of revenues and with the emerging cannabis market, along came an attractive opportunity. However, the U.S. Food and Drug Administration has clearly stated that the use of CBD in foods and beverages is prohibited. Nonetheless, certain states such as California have implemented their own legislation to allow the use of CBD in consumable products. Moving forward, analysts believe that the cannabis-infused beverage industry could potentially capture about 20% of the U.S. market for edible cannabis products by 2022. "Interest has spiked from the beer industry on mounting evidence of a substitution relationship between cannabis and alcohol, while large soda companies increasingly view CBD as a natural fit within their strategically important wellness offerings," Bobby Burleson, Canaccord Genuity Managing Director wrote.

BevCanna Enterprises Inc. (CSE: BEV) announced earlier last week that, "the Company's common shares were approved for listing on the Canadian Securities Exchange (the "CSE") and will commence trading on the CSE at the market open on Tuesday, July 2, 2019, under the symbol "BEV". The Company has 45,510,750 shares outstanding, of which 17,491,095 are held in escrow for release over time, in compliance with National Policy 46-201, Escrow for Initial Public Offerings and pursuant to the terms of a voluntary pooling agreement. The Company has granted an aggregate of 1,250,000 stock options under the Company's Stock Option Plan to certain of its executive officers, which are exercisable at a price of $0.50 per share until February 28, 2024.

About BevCanna Enterprises Inc: BevCanna Enterprises Inc. (CSE: BEV) plans to develop and manufacture cannabinoid-infused beverages and consumer products for in-house brands and white label clients. With decades of experience creating, branding and distributing iconic brands that have resonated with consumers on a global scale, the team demonstrates an expertise unmatched in the emerging cannabis beverage category. Based in British Columbia, Canada, BevCanna has a 100-acre outdoor cultivation site in the fertile Okanagan Valley and the exclusive rights to a pristine spring water aquifer, as well as a world-class 40,000-square-foot, HACCP certified manufacturing facility, with a current bottling capacity of up to 72M bottles. BevCanna's vision is to be a global leader in infused innovations. For more information, please refer to the Company's prospectus dated June 20, 2019, which is available under the Company's profile on SEDAR at www.sedar.com."

Constellation Brands, Inc. (NYSE: STZ), a Fortune 500® company, is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. Constellation Brands, Inc. and Canopy Growth Corporation recently announced the closing of Constellation's CAD 5 Billion (USD 4 Billion) investment in Canopy Growth, which was previously announced on August 15th, 2018. The transaction was approved by an overwhelming majority of Canopy Growth shareholders and has been granted all required regulatory approvals, including by the Canadian government under the Investment Canada Act. This investment provides Canopy Growth with significant funding needed to build scale in the more than 30 countries currently pursuing federally permissible medical cannabis programs, while establishing the foundation needed to supply new recreational adult-use markets as cannabis becomes legal in markets around the world. "We're excited to expand our strategic partnership with Canopy Growth and to begin helping them build the global scale needed to win long-term," said Rob Sands, Chief Executive Officer, Constellation Brands. "The global cannabis market presents a significant growth opportunity and Canopy Growth is well-positioned to establish a strong leadership position in this fast-evolving category."

Anheuser-Busch InBev SA/NV (NYSE: BUD) is a publicly traded company based in Leuven, Belgium, with secondary listings on the Mexican and South African stock exchanges and with American Depositary Receipts on the New York Stock Exchange. Recently, AB InBev, the world's leading brewer, and Tilray, a global pioneer in cannabis production and distribution, announced a partnership to research non-alcohol beverages containing tetrahydrocannabinol (THC) and cannabidiol (CBD). The partnership is limited to Canada and decisions regarding the commercialization of the beverages will be made in the future. The research partnership combines AB InBev's deep experience in beverages with Tilray's expertise in cannabis products. AB InBev's participation will be through its subsidiary Labatt Breweries of Canada, one of the country's founding businesses and its leading brewery, and Tilray's participation will be through its Canadian adult-use cannabis subsidiary High Park Company, which develops, sells, and distributes a portfolio of socially responsible cannabis brands and products in Canada. Each company intends to invest up to USD 50 Million USD, for a total of up to USD 100 Million USD. "Labatt is committed to staying ahead of emerging consumer trends. As consumers in Canada explore THC and CBD-infused products, our innovative drive is matched only by our commitment to the highest standards of product quality and responsible marketing. We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities," said Kyle Norrington, President, Labatt Breweries of Canada. "We look forward to learning more about these beverages and this category in the months ahead." 

Molson Coors Brewing Company (NYSE: TAP) (TSX: TPX) has defined brewing greatness for more than two centuries. Molson Coors Canada (MCC), the Canadian business unit of Molson Coors Brewing Company, and HEXO Corp. recently announced that they had closed the transaction announced on August 1st, 2018, to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization. The joint venture, Truss, will be led by former Molson Coors executive, Brett Vye, in the role of Chief Executive Officer. Vye will report to the Truss board of directors consisting of three members appointed by MCC and two members appointed by HEXO. "With the backing of two partners with deep Canadian roots, proven success, and market-leading experience in the respective beverage and cannabis industries in Canada, Truss will hit the ground running," said Brett Vye, Chief Executive Officer at Truss. "When consumable cannabis is legalized in Canada, Truss will be ready to make its mark as a responsible leader in providing high-quality beverages for the Canadian consumer. Why "Truss"? We are joining together the extensive experience and excellent practices of each partner to build a powerful foundation for the future."

Tilray, Inc. (NASDAQ: TLRY) is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in twelve countries spanning five continents. Tilray, Inc. recently announced it had entered into a definitive agreement pursuant to which Tilray will acquire all of the issued and outstanding securities of FHF Holdings Ltd., from Compass Group Diversified Holdings, LLC and other shareholders of Manitoba Harvest. Under the terms of the Agreement, Tilray will acquire Manitoba Harvest on a cash and debt-free basis, for an aggregate purchase price, including cash and class 2 Common Stock in the capital of Tilray, of up to CAD 419 Million pending the achievement of certain milestones after the closing of the Transaction. Together, Tilray and Manitoba Harvest plan to grow both companies' revenue while bringing nutritious hemp foods and supplements to more households across the U.S. and Canada. The acquisition will expand Tilray's product portfolio into the natural foods category and bring Manitoba Harvest expertise in working with cannabinoids, including cannabidiol (CBD). By leveraging Manitoba Harvest's established distribution network, Tilray plans to accelerate its expansion into the U.S. and Canadian markets, where legal, for CBD products. Manitoba Harvest also brings to Tilray an experienced team and manufacturing capabilities, including the addition of two high quality BRC AA+ certified manufacturing facilities as well as significant sales and distribution capabilities. "Tilray's acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories," said Brendan Kennedy, Tilray President and Chief Executive Officer. "We're excited to work with Manitoba Harvest to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the U.S. and Canada."

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