Cannabis drinks have earned a lot of hype based on their potential to bring new consumers into the industry.
Despite the possibilities, the early iterations of these drinks haven’t been runaway success stories due to a variety of reasons. One key factor, according to the data available, may simply be a lack of interest from the existing consumer base.
In an interview with the Investing News Network (INN), Michelle Sundquist, director of innovation product design with SoRSE Technology, a Seattle-based CBD product developer, talked about the development of these drinks.
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Give me my free report!Sundquist spent 20 years with Starbucks (NASDAQ:SBUX) in a variety of roles, but primarily focused on the product development aspect of the business alongside researching trends in consumer interest in new beverages.
The beverage expert said the hesitation seen from consumers is to be expected as purchasing tendencies and understanding of these beverages settles in.
“They may not have trust in the ingredients, they might not have trust in the format,” Sundquist said.
“There’s a little confusion as to ‘if it’s in my beverage how much should I have? Is it real? How much CBD is really in it? And does it come from a reputable company?’”
In the end, the struggle to attract consumers will relate to proven marketing and beverage design tactics, Sundquist said.
“People might be a little bit hesitant to buy it because it’s not calling out to them as something that’s made for them,” she said. “So a lot of it comes down to figuring out who your consumer is and figuring out how they are going to get your product.”
What about brand new consumers looking to get started? Sundquist told INN if a consumer walks into a store not knowing about the products available, they will likely gravitate towards something that looks familiar to them.
“It’s not enough just to have a solid product if the flavors are not right, if the timing is not right, if the place isn’t right, then you’re gonna have a really difficult time,” Sundquist said.
Canadian market poised to deliver modern drinks market
In Canada, Canopy Growth (NYSE:CGC,TSX:WEED) has relentlessly pursued consumers who may be open to making cannabis drinks their preferred delivery method.
“Based on our research, 17 percent of Canadian adults who currently don’t consume cannabis say they intend to use recreational cannabis… We see a significant opportunity to recruit these intended consumers through products like our drinks,” Canopy Growth CEO David Klein said, according to a report from Marijuana Business Daily.
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Give me my free report!In its most recent quarterly report, Canopy Growth noted it had sold just over a million cans of its drinks. Klein told Yahoo Finance Canopy’s drinks represented 74 percent of the total beverages sold in Canada over a year-to-date period as of mid-August.
However, the promise and potential hasn’t matched up current sales, as vape pen products have dominated the 2.0 portion of products in Canada. Recreational products became legal in October 2018, however, ingestible and vaporized products didn’t go up for sale until a year later.
The cannabis giant will also be facing increasing competition as the love child corporation from cannabis producer HEXO (NYSE:HEXO,TSX:HEXO) and Molson Coors Beverage (NYSE:TAP,TSX:TAP) will finally be launching its drinks into the market.
The Canopy Growth and HEXO offerings immediately jumped in potential given the relationships with beverage companies Molson Coors and Constellation Brands (NYSE:STZ), which has an investment deal in place with Canopy Growth.
CBD plays a key role for wellness consumers
As with many aspects of the cannabis industry CBD is a strong mainstream element of the market. When it comes to beverages, Sundquist said CBD beverages tend to tap into the wellness factor of the entire cannabis industry.
According to the Global Wellness Institute, in 2018 the global wellness economy reached a US$4.5 trillion mark.
This consumer desire to know more about ingredients and the aspect of wellness associated with every product has directly tied to the rise of CBD wellness products, Sundquist said.
An instant connection between CBD and the wellness segment, according to the beverage expert, is sparkling water products.
“People want to drink sparkling water because it hydrates, it has no calories, they don’t have to worry about clean ingredient statements because it’s just water,” Sundquist said. Adding CBD sparkling water is an easy connection into something that people can easily incorporate into their lives.”
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.