(YAHOO)- Beer, wine and spirit giants, along with small startups, are betting on cannabis drinks disrupting the beverage market with products that can soothe sore muscles after a workout, or deliver a hangover-free buzz.
Canopy Rivers (RIV.TO), a venture capital firm with links to cannabis giant Canopy Growth (WEED.TO)(CGC), said it’s seen about 1,800 pitches in the past 16 months and identified over 115 cannabis beverage brands that could disrupt the drinks industry.
“We don’t expect this number to stop growing either,” Canopy Rivers associate Ben Futoriansky wrote in a recent blog post.
Futoriansky broke down pot beverage players by alcohol substitutes and traditional beverages. The companies range from Canopy Growth’s Tweed brand which plans to launch its first drinks as early this month, to California-based Tinley (TNY.CN)(TNYBF), which recently announced a distribution deal to bring its alcohol-inspired pot drinks to Canada.
Canopy Rivers has invested in a plant-based food and beverage firm called Greenhouse, and another beverage and edibles brand called Herbert. Larger investments in the space include Corona beer-maker Constellation Brands’ (STZ) stake in Canopy Growth, Tilray’s (TLRY) deal with AB InBev (BUD), and Molson Coors’ (TAP) joint venture with HEXO (HEXO.TO)(HEXO).
Legal cannabis beverages have yet to be released in Canada. Skeptics note the category commands a narrow share of cannabis sales in U.S. states where pot is legal.
BDS Analytics found drinks accounted for just one per cent of cannabis revenue in California in August. However, a recent report released by Grand View Research projects the global cannabis beverage market will top US$2.8 billion 2025.
Cannabis legalization in Canada has negatively impacted already struggling beer sales before a single legal pot drink hit the market, according to research by Cowen released earlier this month. Booze and cannabis analyst Vivien Azer found Canadian beer volumes in the first year of cannabis legalization were down three per cent, versus the prior five-year average of a 30 bps decline.
“The launch of new [cannabis] form factors will likely perpetuate this trend,” she wrote in a Jan. 7 research note. “We continue to favour cannabis over mainstream beer.”
Demand for drinks could be brisk if purchases of other edible cannabis products are any indication. Edible and vape products went on sales in the Ontario Cannabis Store at 9:00 a.m. ET on Thursday. Multiple products sold out within an hour.