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Despite Regulatory Issues, CBD-Infused Beverages Are Trending Products

December 31, 2019

 

Many Consumer Packaged Goods (CPG) food and beverage companies are proceeding full-speed ahead in launching products containing CBD. This is despite the position of the Food and Drug Administration (FDA) and some states that CBD is not approved as an additive in food, beverage, or nutritional supplements. Because of this, many of these CBD-infused beverages are being marketed and sold only in states that allow CBD as an additive.

 

The most popular CBD-infused beverage categories in the market are seltzers, waters, and carbonated drinks. Coffees, teas, non-alcoholic beers, and ciders are also being sold.  Many of these beverages are being marketed as “rescue” drinks, to chill out, and feel calm. 

 

Most of these CBD-infused beverages are also not easy to purchase. Many are only available in a local market or at best have limited geographical distribution. 

 

Media attention regarding CBD-infused drinks increased over the past week when a YouTube video was posted, that showed a man, who goes by the name of “Gabor the Blind Guy” opening a can of what he claimed to be a CBD-infused Coke. In the video, he also claimed to have insider knowledge of Coca Cola’s intent to launch a line of CBD-infused drinks in partnership with a Canadian cannabis producer. The video has since been deleted. 

 

In response to the video, Kent Landers, a Coca Cola spokesperson told FOX Business,  "These rumors are untrue. As we have stated many times, we have no plans to enter the CBD market."

 

This is not the first time that Coca Cola has denied that it was entering the CBD-infused beverage space. Over a year ago Bloomberg reported that the company was in serious discussions with a Canadian cannabis producer to develop a CBD-infused beverage. The company denied the report at that time. In response,  Warren Buffet, a significant Coca Cola shareholder through his Berkshire Hathaway, also stated, “It would be a mistake for Coca-Cola to get into the marijuana–cannabis business. They have a wholesome image and that would be detrimental to it.”

 

Most CBD-infused beverage brands are avoiding making health or medical claims to avoid the wrath of the FDA, but benefits directly or indirectly touted typically include reducing anxiety, insomnia and stress, and that they’re beneficial for pain.

 

While there are dozens of CBD-infused beverages in the market, here are two, somewhat unique beverages, that are being marketed.

 

Seattle-based OLEO started by selling single-serving CBD drink mixes. The company is now selling six-packs of flavor specific single-serve CBD supplements in a variety of flavors.  The company has stated that their products are “are ideal for athletes, fitness fanatics and outdoor explorers and that the beverages “renew the body and revive the mind, before or after any activity where significant energy is expended.”  Oleo’s powdered drink mixes dissolve quickly in water. The company claims that it is using its own proprietary and patent-pending micro-encapsulation technology, which converts CBD oil into a water-soluble powder. The company also claims that doing so doubles the bioaccessibility compared to regular CBD oil. 

 

Kickback Coldbrew is marketing vegan coffee infused with 20 mg of CBD per serving. The company claims that combining caffeine with CBD provides an “energetic vibe.” Kickback Coldbrew is available in several flavors, including Just Peachy, Golden Cashew, Coffee Date, Match and O.G. Cold Brew.  

 

Despite the regulatory and legal issues, our advice to CPG food and beverage companies remains the same. Go ahead and formulate CBD-infused beverages and develop the marketing, distribution and sales strategy. As more states legalize the use of CBD as a food and beverage additive, the product could be launched initially in those states, while awaiting FDA approval of CBD as a food and beverage additive. An increasing number of states are allowing CBD as an additive, and California, the world’s fifth-largest economy is likely to do so in the first quarter of 2020. Depending on California’s likely regulations regarding CBD-infused beverages, we believe that the state could be a great test market.

 

About FC Global Strategies

 

FC Global Strategies (FC) provides strategic services and programs to early-stage and entrepreneurial growth-oriented companies and is focused on the cannabis, hemp, CBD, and renewable energy industries in the US and globally. (www.fcglobalstrategies.com) 

 

These services and programs include: 

  • Development, implementation, and review of growth strategies.

  • Identification of global opportunities,  the structuring of cross-border transactions, and other strategic directions.

  • Development of programs to increase operational efficiencies and profitability.

  • Providing operational due diligence for institutional investors

  • Development and implementation of turn-around strategies

 

About Hemp Boot Camps

 

FC Global Strategies’ affiliate, FC Global Events, sponsors Hemp Boot Camps. These one-day events are held throughout the United States and are targeted to:

 

  • Farmers growing other crops who are interested in growing hemp. 

  • Farmers currently growing hemp, who want the latest information and resources, especially regarding cultivars, the latest in cultivation techniques, and the market for hemp fiber, seeds, and CBD.

  • Entrepreneurs interested in starting a hemp or CBD business. 

  • Investors interested in better understanding the hemp and CBD industries as investment opportunities.  

  • Manufacturers or marketers of CBD products, or entrepreneurs interested in producing or marketing CBD products.  

 

A Hemp Boot Camp will be held in Lincoln, Nebraska on February 1, 2020.

 

 

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