Arizona Iced Tea is Joining the Cannabis Industry
The growth of the cannabis industry in Canada has taken the rest of the world by storm.
With numerous countries attempting to follow suit, we begin to see marijuana, THC, and CBD infused foods on our shelves. In retrospect, it was only a matter of time before big brands invested in this rapidly growing industry. Arizona Ice Tea manufacturers, the Arizona Beverage Co., are the latest American beverage firm to get prepared for what is expected to be a booming market.
Earlier this month, the Arizona Beverage Co. reached a deal with Dixie Brands Inc. Dixie Brands will provide a range of cannabis supplies, including topical creams, cannabis edibles, and their own tinctures. This deal will see Dixie Brands rolling out a range of cannabis infused beverages. As reported in the Wall Street Journal, the planning is still in the early stages but “…is likely to start with vape pens and gummies.”. It is further speculated that any number of beverages may be produced due to this collaboration.
Speaking of the move, Arizona CEO Don Vultaggio commented that the company had to be willing to try things. He went on to say that “The upside is, we’re one of the first ones in an emerging space.” Indeed, Arizona Beverage Co. is one of the first big brand names in America to get involved in the growing cannabis industry. However, it looks like the competition is not far behind.
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The Cannabis Beverage Business is About to Boom
The Arizona Beverage Co. might be just one of many in a growing trend. At the end of December last year AB InBev entered into a similar partnership. Anheuser-Busch, InBev are the firms behind the fabled Budweiser brand, and are well placed to invest vast sums to see their plans for THC and CBD infused non-alcoholic beverages come to fruition.
InBev are the world’s largest brewer and they have now teamed up with Canadian pot producer Tilray Inc, with each company putting forward $50 million. Tilray’s CEO Brendan Kennedy told Reuters that it is too soon to be sure how big this market will be. Although he believes the future is promising for the cannabis beverage industry in Canada; it is difficult to predict market trends in a country that has not yet legalized the use of edibles. Another downside of this particular deal is that it does look like activity will be restricted to Canada for the foreseeable future.
August of 2018 also saw Canadian cannabis producer HEXO enter into a slightly different kind of deal with Molson Coors Canada. This new joint venture will be named ‘Truss’ and will be headed by Brett Vye, former CEO at Molson Coors. It will operate as a standalone company in which Molson Coors has a 57.5% controlling stake.
What is the reasoning behind this move? Mark Hunter, President of Coors, believes that the future cannabis beverage market in Canada stands to be worth some $1.5bn. When he spoke at the Q3 earnings call in 2018 he said that the market has a value of approximately $7bn to $10 bn, with around 20% to 30% of that figure taken up by beverages. With such a large potential profit to be made, it stands to reason that other beverage and cannabis manufacturers will soon emerge.
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Overcoming the Obstacles
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All of this potential business does come with a few hurdles. The matter of illegality of edibles in Canada is a comparable problem. Canada has already tackled this issue and edibles are set to be legal as of October 2019 – although we may have to wait until December before the first products are available. Even once made, these products will have to follow strict rules on labeling and content. That being said; Canada remains one of the most progressive locations on the planet with regards to the cannabis industry, with a multitude of Canadian and American companies vying for a piece of the cannabis pie.
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