With Canada expected to legalise recreational use of marijuana by next July, the real innovations of 2018 will be edibles and drinkables, reports Emily Lewis
As legalisation of marijuana continues to sweep the States, foodservice industry experts such as Tom Vierhile of GlobalData are expecting recreational cannabis to take the markets by storm.
“Because of the legalisation of these products,” says Vierhile, “you’re seeing companies start to innovate, and add THC – the active ingredient in marijuana – to various edible products, including candies, cookies, snacks, as well as beverages.”
A tricky market
The biggest cannabis-related news of late is New York-based Constellation Brands announcing their acquisition of a minority stake in Canopy Growth Corporation, a Canadian medical cannabis producer.
The investment represents 9% of Canopy Growth, and Vierhile believes the acquisition represents a shift in the market.
“Most big companies have taken a hands-off attitude to THC products. But, the big news was Constellation Brands. With Canada legalising recreational marijuana next year, larger companies will begin to move into this market and experimenting with products of their own.”
But, Vierhile has also pointed out exactly what might be stopping large companies and retailers from taking a share in the cannabis market in the US.
“Because its been a patchwork legalisation process, I think that the big brands probably don’t want to get involved in a product, market that product in states where marijuana is legal, and then see that product pop up in some states where it is not legal,” says Vierhile.
This is where smaller companies may have the edge, with Vierhile noting, “I think that we’ll all see the smaller companies emerge, because they’re willing to take risk, and have no big reputation that could be sullied.”
The main market for recreational marijuana, whether in edible, drinkable or smoke-able form, is 21-24 year olds. Alcohol companies are particularly worried about cannabis infringing on their niche, with MillerCoors reporting that 40% of its beer losses come from 21-24 year olds.
“Beer is traditionally seen as an entry-level beverage for younger drinkers, but there’s a lot of issues with health and wellness, and the caloric content of beer,” explains Vierhile.
Trying to combat this dip in beer consumption by younger buyers, MillerCoors are releasing a new flavoured beer, ‘Two Hats’, which is specifically targeted at 21-24 year olds.
“Younger legal-age drinkers are a difficult cohort for beer companies to capture, in part because this group of consumers view beer as ‘very polarising’,” says Justine Stauffer, brand manager for MillerCoors’ new product, ‘Two Hats’.
Next big thing
Although Vierhile predicts major growth for cannabis and THC-laced products in 2018, particularly in the edible and drinkable form, there are already some companies that have established products on the market.
These include Cannabis Quencher Sips by VCC brands, which come in ‘sip-sized’ bottles, to make sure that consumers take the correct dosage. Seven Cities Beverage Companies are producing their own drinkable, California Dreamin’, a clean-label juice drink, marketed as 100% natural.
Vierhile stresses that marijuana and THC products are not to be under-estimated, and are certainly not a passing phase. In 2001, a Gallup poll saw 31% of Americans vote in favour of legalisation of cannabis. This year, that jumped to 64%.
“The larger issue here is marijuana being negatively associated with tobacco smoking. I’m not necessarily convinced that that’s where growth lies – it’s edibles and drinkables that are likely to be a strong path of innovation for the future.”
FCSI The Americas’ Conference on 19-21 April 2018 in Denver, Colorado, will feature a breakout session on ‘The Business of Cannabis Kitchens’ from Jaime Lewis, founder and CEO of Mountain Medicine. Cannabis is a booming sector in Denver, where licensed stores may sell retail marijuana. The topic of how to design and specify for cannabis centralized kitchens will be a new one to many consultants and well worth attending.
For more information on that session, please click here.