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Why CBD Infused Beverage Brands Are Ripe for Investment

Ryan Allway

May 5th, 2020

App, Exclusive, News, Top Story

Coca-Cola purchased Glaceau’s Vitaminwater for more than $4 billion in 2007, making it the beverage giant’s most expensive acquisition ever at the time. With carbonated drink sales on the decline, the beverage giant sought to diversify its revenue into the rapidly growing functional beverage market, which already accounted for about half of non-alcoholic beverage revenue by 2008 at $118 billion. The move ultimately paid off as Vitaminwater sales rose from $350 million to more than $1 billion per year in just a few years.

By late-2018, Coca-Cola held talks with Aurora Cannabis Inc. with an interest in cannabidiol, or CBD, infused beverages. The company hasn’t officially moved forward with any CBD-infused beverages, but a spokesperson told Bloomberg that the company was “closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world”. These trends could ultimately boost existing CBD beverage makers, such as Innoviom, Inc., which recently launched its products online.

In this article, we will take a look at the rise of M&A activity in the functional beverage industry and why CBD-infused beverages could become a new area of focus.

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Big Beverage Goes on a Buying Spree

Coca-Cola’s acquisition of Vitaminwater began a move into functional beverages that have continued to this day. Since many large companies aren’t developing innovative new products in-house anymore, they look towards acquisitions where they can apply their marketing expertise to unlock tremendous value. They hope that these products will offset the -1.6% CAGR experienced by the carbonated soft drink market between 2012 and 2017—a market that still constitutes the majority of revenue for Coca-Cola and PepsiCo.

Innoviom, Inc.’s CEO Ahmed El Azizi discusses the evolution of the functional beverage market and where it’s headed over the coming years in an exclusive interview with CFN Media:

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There have been many examples of functional beverage activity in recent years:

  • Bai Brands – Dr. Pepper Snapple bought Bai Brands in 2016 for $1.7 billion. After getting started in 2010, the company developed low-sugar products based on coffee fruit and received a $15 million investment from Dr. Pepper before ultimately being acquired a few years later.

 

  • BODYARMOR – Coca-Cola acquired a minority ownership stake in BODYARMOR back in August 2018, which has a popular line of premium sports performance and hydration drinks. The move followed its acquisition of Organic & Raw Trading Co., which makes the kombucha brand, Mojo.

 

  • Rockstar Energy – PepsiCo signed a $3.85 billion acquisition agreement with Rockstar to “capitalize on rising demand in the functional beverage space”. The Las Vegas-based energy drink company was founded in 2001 and posted triple-digit annual revenue increases between 2001 and 2007 to $405 million.

Upcoming Trends to Watch

Millennials, famous for their love of craft and healthy products, are a key driving force behind beverage trends. New research shows that nearly two-thirds of them intend to reduce the amount they drink, which has drink and alcohol suppliers across the industry transitioning to low-alcohol alternatives, zero-alcohol options, and increasingly, CBD-infused beverages. These are key trends that investors, both retail and high net worth, should watch over the coming years as the industry continues to evolve.

There have been several efforts to cater to these trends:

  • White Claw introduced hard seltzers that have seen triple-digit growth.
  • Heineken invested $50 million in developing Heineken 0.0 beer.
  • VYBES and Recess launched non-alcoholic CBD beverages.
  • Diageo invested in Seedlip—a developer of herbal drinks.
  • Province Brands of Canada is developing nonalcoholic beer with THC or CBD.

In addition, many beverage companies have embraced direct-to-consumer models to circumvent the high cost and limitations of traditional retail. Many non-alcoholic beverage brands are launching strong on e-commerce before transitioning to wholesale distribution, such as LifeAID, Soylent, Dirty Lemon and 82 Labs. In the alcoholic beverage space, taprooms are increasingly introducing customers to wine, beer and spirits and then providing local delivery services to circumvent the conventional distribution model.

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Innoviom is Well-Positioned

Innoviom is an innovative house of beverage brands that produces and sells functional, tasty beverages based on herbal, relaxing ingredients. The company recently introduced a CBD drink to its existing product line and distribution network, including sales on Amazon.com. Led by major company beverage and consumer packaged goods veterans from companies like Coca-Cola, Diageo, Red Bull, Gillette, and PepsiCo, Innoviom is growth-focused with existing infrastructure and ambitious plans for international expansion.

Innoviom’s flagship brand is Tranquini®, a line of great-tasting, low-calorie beverages designed to help relieve stress through its mix of herbal, relaxing, adaptogenic ingredients. Adaptogens are defined as natural bioregulators that increase the ability to adapt to environmental stress factors and avoid the damage caused by those factors. Adaptogens have been shown to have positive effects on conditions ranging from adrenal fatigue to arthritis to sleep disorders and more.

The company’s most recent product is Wowie™ by Tranquini®, a line of low calorie, great tasting relaxation drinks that adds 20 mg of Hemp derived CBD to the mix of adaptogens utilized in the Tranquini products. CBD, or cannabidiol, is the prominent non-psychoactive ingredient in cannabis. The CBD contained in Wowie drinks is derived from hemp grown in the U.S. and contains no THC, the psychoactive ingredient in cannabis that gets people high. 

If you’re an accredited investor, click here to learn more about how to invest in Innoviom as it gears up commercialization in the functional beverage market.

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The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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