It seems cannabis is taking the beverages industry by storm, with more alcohol and soft drink companies shifting their focus to pot-based products. The growing popularity of medical marijuana in the US and moderation of regulatory hurdles have increased the acceptance of pot-based products. Cannabis got an extra boost this week after it received the endorsement of the world’s largest beverage company.
On the heels of liquor giant Constellation Brands (STZ) acquiring stake in a Canada-based medical marijuana company last month, Coca-Cola (KO) Monday revealed plans to forge a partnership with Aurora Cannabis, also headquartered in Canada, to produce wellness drinks based on cannabis. The move could be part of Coca-Cola’s long-term strategy of diversifying to other areas amidst the falling popularity of carbonized beverages.
The move could be part of Coca-Cola’s long-term strategy of diversifying to other areas amidst the falling popularity of carbonized beverages
After adding non-traditional items like mineral water, juice and tea into its product portfolio over the years, the Atlanta-based company had clinched a $5-billion deal to acquire the Costa Coffee chain last month.
A statement from Coca-Cola said it has been exploring the scope of products containing cannabidiol, a chemical found in marijuana that is used as an ingredient in wellness beverages worldwide. However, the communiqué did not talk about any confirmed deal with Aurora.
Cannabidiol is a much better bet compared to cannabis for the relevant industries in the US, where the use of marijuana is legal only in a few states. The substance, which relieves pain and inflammation without intoxicating the consumer, has been generating interest among traditional soft drink manufacturers who keep exploring alternative options to revive falling market share.
After witnessing some big fluctuations over the past twelve months, Coca-Cola shares recently started stabilizing. The stock, which gained about 4% since the beginning of this month, rose modestly in early trading Monday. Meanwhile, Aurora’s stock surged about 15% in the US secondary market.
The report pumped in fresh vigor into the other cannabis stocks also. Tilray (TLRY), the medical marijuana company that went public recently, gained nearly 9%. Canopy Growth, the company that sold its stake to Constellation, gained more than 2%.
Constellation Brands looks to cannabis for a high, ups stake in Canopy