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Canada News.Net
3 days ago
- Business
- Canada News.Net
THC beverages bite into beer sales, alcohol giants plan counter
NEW YORK CITY, New York: As cannabis-infused drinks grow in popularity and take over retail shelf space once dominated by beer and spirits, major alcohol companies are preparing for a potential pivot into the emerging category. THC drinks—infused with the psychoactive compound found in marijuana—are being sold legally across many U.S. states when derived from hemp, a federally legal crop. These hemp-based beverages are increasingly available in liquor stores, convenience shops, and supermarkets, offering a legal workaround to traditional dispensary restrictions. While leading alcohol companies have largely sat out this boom, a shift is underway. Founders of cannabis beverage brands, ingredient suppliers, and drink manufacturers told Reuters that some big players are now exploring entry points into the market, prompted by declining alcohol sales and growing consumer interest in alternatives. Constellation Brands has been studying hemp-based cannabis drinks, according to a source familiar with its plans. Pernod Ricard recently met with Brez, a THC beverage brand, to discuss a possible investment. "They did not invest now but are circling," said Brez founder Aaron Nosbisch. Pernod declined to comment. U.S. alcohol sales have cooled since their pandemic-era spike. Beer volumes dropped nearly 6 percent through May, while spirits and wine declined by 5.6 percent and 9 percent, respectively. Public health warnings linking alcohol to cancer have also pressured the industry. Meanwhile, hemp-based THC drinks are booming. The market is expected to top US$1 billion in sales this year and quadruple by 2028, according to Euromonitor. Companies like Tilray are already moving in. Its THC seltzers, sold through existing beer distributors, are now available in 13 states. "There's not a real leader... and that's what we look to do," said CEO Irwin Simon. Legacy alcohol brands are cautiously experimenting. Boston Beer, known for Sam Adams, is testing a hemp-based version of its THC tea brand Teapot in the U.S., following its rollout in Canada. "This is a source of growth for our organization, flat out," said Paul Weaver, who leads the company's cannabis division. But challenges remain. State regulations vary widely. California banned hemp-based drinks last year, while other states have imposed taxes or restrictions. Senator Mitch McConnell recently proposed federal limits on intoxicating hemp products to keep them away from children. Big brewers have also faced past setbacks. In 2022, Anheuser-Busch exited its cannabis joint venture in Canada, and Molson Coors shut its CBD beverage division in the U.S. that same year. Despite this, retail enthusiasm is strong. Liquor stores report that THC beverages are driving higher margins than beer or spirits. At Top Ten Liquors in Minnesota, they now account for 15 percent of business and could soon rival wine in sales. "The soccer mom has really embraced the category," said CEO Jon Halper. Distributors, too, are seeing the shift. Southern Horizon Logistics now sells more hemp-based drinks than wine and spirits. Best Brands CEO Ryan Moses said growth in this segment helped avoid layoffs by reallocating staff. For consumers like Josh Goldberg, who swapped beer for THC seltzers two years ago, the appeal is simple: "It replaces the physical act of drinking with drinking something else."


CTV News
6 days ago
- Business
- CTV News
Big Alcohol prepares to fight back as buzzy cannabis drinks steal sales
A marijuana plant awaits judging in the Oregon Cannabis Growers' Fair marijuana plant competition in Salem, Ore. on Saturday, Aug. 13, 2016. (AP / Gillian Flaccus) NEW YORK — Top alcohol makers have been sitting on the sidelines of a cannabis beverage boom, watching brands in the fast-growing category like Cann and Wynk make deals with beer and booze distributors, and gain valuable space on liquor store shelves. Now some alcohol companies, seeing their sales falter, are laying the groundwork to potentially enter the lucrative but risky market, a dozen founders of cannabis brands, ingredients suppliers and drinks manufacturers told Reuters. Drinks containing THC, the mood-altering ingredient in marijuana, are restricted to licensed dispensaries in 24 U.S. states where recreational use of pot is legal. But small amounts of THC can also be extracted from hemp, a crop that's related to marijuana but is legal federally. Beverages containing THC derived from hemp can be sold in many liquor shops, convenience stores and supermarkets. That's where Big Alcohol sees opportunity, despite some companies having been burned by past cannabis investments. Corona brewer Constellation Brands has been internally researching hemp-based cannabis drinks to weigh its next steps, a source familiar with the company's thinking said. Absolut vodka distiller Pernod Ricard has met with Brez, maker of drinks with THC derived from hemp, as recently as last month to discuss a possible investment, Brez's founder Aaron Nosbisch said. 'They did not invest now but are circling,' Nosbisch said. Pernod declined to comment on the meeting. Constellation Brands said it does not comment on rumors and speculation. Alcohol makers are still suffering a hangover following America's pandemic drinking binge, when sales spiked as cash-flush consumers splurged on pricey bottles of liquor for their homes, and then rushed back to bars when lockdown restrictions lifted. Alcohol sales have been falling ever since as inflation and interest rates rose and wallets became stretched. The companies also now face growing warnings from public health authorities who say drinking even small amounts of alcohol is associated with at least seven types of cancer. Overall U.S. beer volumes fell nearly six per cent through May of this year, according to the Beer Institute. Volumes of spirits and wine sold in the same time period have declined by 5.6 and 9 per cent, respectively, according to the Wine & Spirits Wholesalers of America. In a sign of tumult in the industry, the CEO of the world's biggest alcohol maker, Diageo, stepped down last week as the company struggles to revive growth. But hemp-based drinks are expanding fast. The market for drinks infused with THC from hemp is projected to top US$1 billion in sales this year, according to market research firm Euromonitor, and climb past US$4 billion in 2028. Molson Coors CEO Gavin Hattersley told Reuters in January he'd be naive to say THC beverages aren't having an effect 'at least in a small way.' Tilray Brands, the fourth-largest U.S. craft brewer with brands including Montauk and Shock Top, is selling its new hemp-derived THC seltzers through its beer distributors such as United Distributors in Georgia, executives told Reuters in an interview. The company's THC drinks are for sale in 13 states. 'There's not a real leader that's taken ahold of the (market) so far, and that's what we look to do,' Tilray's CEO Irwin Simon told Reuters earlier this year. Others, including Heineken's Lagunitas brand and Pabst Blue Ribbon, the fifth-largest U.S. brewer, have lent their names to THC seltzers for sale in dispensaries in California. Lagunitas is looking to grow distribution of its THC seltzer, potentially using hemp, to other states, a representative from Cannacraft, its ingredient supplier, said. A spokesperson for Lagunitas said it has no immediate plans to expand, but monitors market development and looks for opportunities as consumer tastes and regulations change. Boston Beer, the maker of Sam Adams, is one of the brewers with the clearest path to eventually enter the U.S. cannabis drinks market although it has not provided a time frame for doing so. The company is already selling its Teapot brand of THC-infused tea in Canada where weed is legal, and in the last year tested a potential U.S. version made from THC derived from hemp. To test the reformulated product, a panel of trained sensory experts sampled Teapot with both THC from hemp and marijuana, and could not taste a difference, said the company's head of cannabis, Paul Weaver. 'This is a source of growth for our organization, flat out,' Weaver said. Cautious moves Big Alcohol is treading carefully in cannabis drinks because state and federal regulations have shifted, and could change again, said five executives at ingredients suppliers and THC beverage brands. California, which has legal weed, banned hemp-based drinks last year to try to prevent children from consuming them. Other states have introduced special taxes or restricted sales, ambiguity that has held alcohol companies back from entering the market. Sen. Mitch McConnell, who helped first legalize hemp in 2018 to support farmers in his home state of Kentucky, in July introduced a provision in a government spending bill that could ban intoxicating products using the plant. McConnell wrote in an op-ed published in the Louisville Courier Journal on July 17 that his efforts are aimed at keeping THC gummies that look like familiar candies out of the hands of children. He did not provide comment beyond the op-ed. Big brewers have been burned by past cannabis investments. In 2022, the biggest U.S. brewer Anheuser-Busch inBev exited a deal with Tilray to research cannabis drinks in Canada. The same year, Molson Coors shuttered its U.S. business selling beverages infused with CBD, a compound in marijuana and hemp that does not have psychoactive effects, citing an uncertain regulatory environment. Constellation Brands restructured its investment in Canadian cannabis company Canopy Growth last year after poor sales. Now, however, hemp-based THC drinks are sold widely. Beyond beer's declining sales, brewers face an additional squeeze from tariffs, which threaten to push up prices for imported drinks, and Hispanic consumers, who are staying home due to fears of U.S. immigration enforcement. High margins Liquor stores are embracing the buzzy beverages to boost their margins as the drinks, typically more expensive than a six-pack of beer, start to outsell other types of alcohol. Jon Halper, CEO of Minnesota liquor store chain Top Ten Liquors, told Reuters in June that THC beverages now make up 15 per cent of his business after the company introduced them two years ago. By next year, they could grow to rival wine, currently in the mid twenty percent of his sales, he said. The drinks take shelf space mostly from beer because they are in coolers, Halper said. The margins on cannabis beverages are higher than those for beer and spirits, helping his firm offset softening alcohol sales. Charleston, South Carolina-based Southern Horizon Logistics, a sister company of Budweiser distributor Southern Crown Partners, is now selling more hemp-based drinks than wine and spirits, said Justin Ashby, the company's chief administrative officer. Ryan Moses, CEO of Nashville, Tennessee-based beer, wine and spirits distributor Best Brands, said that growth from THC-infused drinks has helped offset flat and declining alcohol sales. Instead of possible layoffs, Moses has been able to re-allocate employees to the new category. 'It could be as big as the other categories five to 10 years from now,' Moses said. Consumers like Josh Goldberg, 39, of Lindenhurst, New York, are also trading out beer and tequila for THC seltzers. Goldberg made the switch almost two years ago, and hasn't had a drink since. 'It replaces the physical act of drinking with drinking something else,' Goldberg said. Halper, the owner of Minnesota liquor stores, said the customers buying THC-infused drinks tend to skew female and over the age of 35. 'The soccer mom has really embraced the category in a big way,' Halper said. --- Reporting by Jessica DiNapoli in New York and Emma Rumney in London. Editing by Lisa Jucca and Michael Learmonth


Forbes
24-03-2025
- Business
- Forbes
Constellation Brands Acquires Minority Stake In Non-Alcoholic Hiyo
Constellation Brands has acquired a minority stake in the fast-growing functional social tonic brand ... More Hiyo. Constellation Brands, the parent company of Corona Beer, has acquired a minority stake in the fast-growing functional social tonic brand Hiyo. This investment, recently made through Constellation's venture capital arm, aligns with its broader strategy to tap into the burgeoning non-alcoholic beverage market, and is expected to help the brewer expand its presence significantly in the category. Constellation made its first foray into the non-alcoholic space in 2023 by acquiring a minority stake in sparkling cocktails producer Töst. Other brands have also been ramping up their presence over the years, including De Soi, a line of alcohol-free apéritifs created by pop star Katy Perry; microdose-infused tonic, Brez; and non-alc sparkling wines producer, Libby. According to Nielsen IQ, over 93% of non-alcoholic drink buyers also purchase alcoholic beverages, highlighting the complementary nature of non-alcoholic options to traditional beer, wine, and spirits. Hiyo, with its unique blend of functional ingredients, including ashwagandha, L-theanine, lion's mane, lemon balm, passion flower, and ginger, and refreshing flavors, fits seamlessly into this trend, offering consumers a sophisticated alternative for social occasions. 'Our Ventures model is centered around investing in new and adjacent categories in line with where consumers are going, which is what really excites us about Hiyo,' said John Utter, Senior Vice President of New Business Ventures at Constellation Brands. 'Their distinctive brand and delicious liquid make it clear to see why Hiyo is one of the fastest-growing names in the functional non-alcoholic space.' From Personal Journey to Organic Social Tonic Hiyo was born out of a personal journey for its founders: Back in 2019, Evan Quinn and George Youmans, both in their late 20s, found themselves cutting back on alcohol after family members were hospitalized with alcohol-related illnesses. Frustrated by the lack of appealing non-alcoholic options, they teamed up with their college friend Cygne Cooper to create a beverage that could replicate the stress-relieving, mood-boosting effects of alcohol without the downsides. Evan Quinn (left), Cygne Cooper (mid), George Youmans (right) cofounded Hiyo out of personal needs ... More in 2019. 'The existing choices all felt like sacrifices,' said Youmans, Hiyo's cofounder and CRO. 'We wanted to create something that deserved its place at the table, something that could deliver the feeling people seek from alcohol but through healthy, functional ingredients.' The result was a USDA organic social tonic that combines organic juices with adaptogens. Each sunset-inspired can contains only 30 calories and delivers what the company describes as a 'floaty' feeling: relaxed, uplifted, and socially engaged. Elevating the Non-Alc Category Hiyo's rapid growth is a testament to its unique positioning in the non-alcoholic beverage market. According to SPINS data, Hiyo was the largest contributor to the category's growth last year, with a staggering 212.7% year-over-year increase in retail sales. Currently available in four different varieties: blackberry lemon, peach mango, strawberry guava and watermelon lime, Hiyo's beverages are sold across 3,000 U.S. retail stores, including Whole Foods. In addition to launching a new flavor recently, passionfruit tangerine, the company plans to expand its reach throughout 2025. 'From the flavor, to the function, to the feeling, to the health profile, to the look of the cans, Hiyo is making non-alcoholic options feel more fun, flavorful, and socially acceptable,' said Cooper, who's also Hiyo's Chief Brand Officer. 'Non-alcoholic beer's growth is a good barometer for where we believe our category of functional non-alc can be, and possibly exceed, in the coming years," she added. "As more people become familiar with the functional benefits and delicious flavor profiles that brands like Hiyo offer, we'll see a substantial increase in adoption.' Hiyo's current retail footprint has already more than tripled in the past year, and the company aims to continue this trajectory by prioritizing sustainable growth. 'We prioritize dollar rate of sale over total door count,' Quinn noted me via email. 'While we may not be everywhere all at once, we intend to keep our best-in-class velocities on the shelf.'