- The market for cannabis drinks is expanding rapidly, with more and more states legalising marijuana, but mainstream consumer packaged goods marketers are often cautious about entering this industry due to an enduring stigma.
- Our media analysis found that Canopy Growth and Tilray were the corporate brands with the biggest impact on the media debate, while Quatreau and Colorado High were among the most influential product brands.
- Our analysis suggests that companies can normalise the industry by moving cannabis away from the gateway drug narrative, taking advantage of consumers’ perception of “naturalness” and using influencers to educate a broader consumer base.
Amid all the corona trends, the months-long isolation gave rise to a more peculiar one: a growing number of people have turned to marijuana for relaxation and entertainment. This has been brewing since the legalisation of recreational marijuana in California and Canada, which prompted the launch of a number of marijuana-infused products. But now, as more US states legalise pot and hopes rise for federal marijuana reform, the sector has drawn renewed media interest.
The buzz was first sparked in 2018 by the news that Coca-Cola, the world’s largest beverage company and one of the world’s most iconic consumer brands, was in talks with Aurora, a leading Canadian marijuana distribution and marketing company, because it was interested in developing beverages that are infused with CBD. Other marketers in the consumer packaged goods sector have followed suit, seeing a major opportunity in the long-term growth potential of the cannabis sector.
As opposed to other cannabis products, drinks are a particularly attractive option for that growth, as they are seen as a functional product that quenches thirst, energises, calms or acts as a social salve. Moreover, 81% of cannabis consumers believe that cannabis is safer than alcohol. In fact, according to the ‘Disrupting Drinks report published by cannabis market intelligence firm Prohibition Partners, cannabis drinks are likely to pose a threat to the alcoholic beverage industry. Indeed, many media stories draw comparisons with alcohol, emphasising that cannabis drinks don’t give hangovers and lack the high-calorie count of wine or beer.
But although the market for cannabis products is expanding rapidly, mainstream consumer packaged goods marketers are often cautious about entering this industry due to an enduring stigma around marijuana and stereotypes about the customer base. Commentators have noticed that large companies are still cautious, especially since cannabis is not yet legalised across all US states, which gives smaller firms the opportunity to explore the market.
From soft to spirit
To see how the cannabis beverage trend is unfolding in the media, we analysed 630 English-language articles published in the past 12 months.
Our media list included top mass media outlets like Reuters, the New York Times, Forbes and the Guardian, as well as leading industry publications such as The Spirits Business, Beverage Dynamics, Beverage Daily, BBC Good Food and Food & Beverage Magazine.
We found that soft drinks were dominating the media conversation:
Marketers have tried to position cannabis-infused soft drinks as low-calorie, low-dose and perfect for socialising, with some also being vegan and gluten-free. A particular emphasis has been put on flavour profiles, with offerings ranging from lemon lavender and grapefruit rosemary to blood orange cardamom and pineapple jalapeño.
In the meantime, beer companies have commanded a large share of the media debate with their investments: notable news included Constellation Brands’ US$4bn-plus stake in cannabis company Canopy Growth and Molson Coors’ joint venture with Hexo. Many journalists expected multi-national corporations to step into the weed-infused beer space and enhance their standing in the no- and low-alcohol beverage space at the same time.
But when it comes to spirits producers, the big players are playing it safe, with Diageo and Pernod Ricard saying they are still “monitoring” the space. However, spirits start-ups and smaller players, such as Top Beverages and Halewood Wines & Spirits are looking to get ahead with new launches.
In the meantime, cannabis cocktails gained a share of the conversation mainly because they’ve started appearing on the menus at bars in the states where pot is already legalised. As such, they’ve often been positioned as party drinks. In contrast, marijuana tea, traditionally consumed for medicinal or ceremonial purposes, has been marketed as a remedy for a variety of health issues, such as chronic pain, sleep disorder, nausea, stress and depression.
Companies in “high” places
We used Commetric’s proprietary ‘media conversation impact score‘ metric to identify the corporate brands with the biggest impact on the media discussion around cannabis beverages.
We determine an organisation’s media impact in the context of a topic by looking at its media influence score calculated in terms of coverage by high-profile media outlets, topic relevancy score measuring its contextual relevance, and media visibility as measured by the number of mentions.
Canopy Growth, a Canadian cannabis firm backed by New York-based alcohol company Constellation Brands, turned out to be most impactful in the media debate as it officially launched its CBD-infused sparkling waters Quatreau in the United States.
Quatreau was portrayed as the top-selling RTD CBD beverage in Canada (which legalised marijuana for adult use in 2018), with Canopy eyeing up a $20bn functional beverage market in the US. The CBD-based drink launch is part of Canopy’s strategy to gain an advantage in anticipation of nationwide legalisation, which the company expects in the near future.
Canopy‘s hope is to replicate its strong Canadian sales in America with the help of Constellation’s beer distribution network. As such, the story followed the narrative arch of established brands forming strategic partnerships. Similarly, Anheuser-Busch InBev announced that it was partnering with Canada’s Tilray to research non-alcohol beverages containing THC and CBD. Molson Coors also announced news of a joint venture with cannabis company Hexo Cannabis. The tie-up saw the two companies release a line of CBD and THC-infused sparkling waters in Canada.
Another major beer producer, Heineken, was mentioned for being among the first to invest in the weed-infused space: it launched an IPA-inspired, THC-infused sparkling water in the US.
Meanwhile, Cann, which makes social tonic microdosed with cannabis, earned its influence points in the discussion as it was described as the producer of the fastest-growing THC-infused drink on the market. It rose to prominence when Hollywood stars Gwyneth Paltrow, Ruby Rose and Rebel Wilson invested in it and gave it credibility. Cann’s founders, Luke Anderson and Jake Bullock, are hoping Paltrow’s social media clout (Paltrow currently has 7.5 million Instagram followers and 2.5 million monthly podcast listeners) will help bring the brand to a wider audience.
Cann‘s PR strategy also included tapping into trendy themes such as diversity and inclusion, which are particularly important when targeting a younger consumer base. The company boasts an even split of male and female employees, and people of colour make up 33% of the workforce. According to Tech Crunch, actress Ruby Rose was drawn to investing in the company partly due to its commitment to diversity.
In the meantime, Canadian pot producer Aphria said it will merge with rival Tilray, creating the world’s largest cannabis producer by sales and giving it a foothold in the US market. The combined company will also be able to increase the output of branded beverages. Media reports noted that Joe Biden‘s win in the U.S. presidential election and state-level reforms have renewed hopes that the US market is finally ready to open up, boosting deal-making in the sector.
Aphria was also in the news for signing an agreement to buy Atlanta’s Sweetwater Brewing, which is well known in the state for its stoner-focused marketing. Sweetwater targets drinkers with an interest in cannabis through its 420 beer brands and an annual festival held on 20 April, the cannabis holiday.
Female-led California cannabis beverage producer House of Saka featured in the conversation by introducing the two luxurious, alcohol-free, cannabis-infused wines from Napa Valley. The company attracted media interest because these wines were promoted as the first and only infused beverages to stake a claim in California’s most renowned wine-growing region.
The most prominent soft drink marketer in the debate was PepsiCo, which revealed a hemp beverage – Rockstar Energy + Hemp, its first foray in the hemp category (hemp comes from the cannabis family but does not contain THC). Germany is the launchpad for the new beverage, launching in three varieties (original, tropical burst and prickly cactus), and PepsiCo has not specified if or when it plans to expand the beverage globally.
A few brands to map
It’s interesting to note that while many companies used their PR budgets to stay ahead of the game, the media discussion wasn’t that rich in product brand names. As the controversial cannabis space is just emerging and not that many dare to invest, both mainstream and trade media outlets were more interested in the first-mover companies rather than their speicic products.
Canopy Growth’s Quatreau emerged as the most influential brand:
Quatreau, a ready-to-drink CBD-infused sparkling water, was marketed as containing no sugar, natural, low-calorie beverage alternative. The brand is being marketed as an appealing alternative to alcohol and targeted at sober curious millennials.
Quatreau seems to have met consumer demand for functional no and low (NOLO) drinks. The beverage industry has strived to go beyond the mindful consumption messages and to tap into the health and wellness megatrend, which has become big business during the pandemic. As consumers become increasingly health-conscious and seek reduced alcohol and alcohol-free drinks, brands are rushing to fill what was, until a few years ago, a nearly non-existent category.
Silent Pool Distiller’s CBD-infused gin, Colorado High, earned its centrality as it allegedly breached two rules in the UK: one that prohibits associating alcohol with illegal drugs and a second that states there should be no link with therapeutic qualities. The Portman Group, the social responsibility and regulatory body for alcohol in the UK, upheld a complaint by a member of the public, and the Independent Complaints Panel (ICP) found the product’s packaging created an ‘indirect association’ with illicit drugs.
Menawhile, beer brand Pabst Blue Ribbon captivated journalists with its long story: it has drastically rewritten its ethos by rolling out new NOLO variations, introducing PBR Hard Coffee, jumping into the trendy hard seltzer category and releasing its own whiskey. The brand joined the cannabis conversation when it introduced its latest experiment: a non-alcoholic, THC-infused lemon seltzer.
Veryvell, a mood-boosting alternative to alcohol, came under the media spotlight as it was a product of the joint venture between Molson Coors and HEXO Cannabis. Meanwhile, Daydream, a hemp and adaptogen-infused sparkling water brand, became part of the debate when Eat Beyond, which has acquired a slew of alternative protein food brands in the past year, chose it for its first beverage investment.
Cannabis-infused influencers
Corporate spokespeople emerged as the top opinion leaders in the cannabis media discussion, as we analysed the key individuals by influence score (calculated in terms of coverage by high-profile media outlets). Nearly all of them focused their messaging on predicting immense growth for the cannabis category in the future.
Canopy President and Chief Product Officer Rade Kovacevic was the most influential spokesperson: he was quoted in many reports as saying that the US market is currently fragmented, presenting an opportunity for a larger company to scale up in the region. He also said that beverages are fueling growth in the CBD category, hoping that his company’s Quatreau product will resonate with US consumers looking for a naturally flavoured, zero sugar option.
In a similar manner, CEO David Klein, a Constellation veteran who took on the top role at Canopy in December, told the media he wants to make the company a full-fledged consumer packaged goods business, focused on cannabis and hemp. “Part of the whole CPG journey is understanding what the consumer is looking for, and understand how we normalise the category so that we can bring in non-traditional cannabis users into the space, and think about Quatreau with CBD as this being a wellness drink, and Quatreau with CBD and THC as a tool for relaxation,” he voiced.
Aphria CEO Irwin Simon and Tilray CEO Brendan Kennedy said the deal between their two companies better positions them to take advantage of potential US federal legalisation and is also built on the prospect of more legalisation in Europe.
Cann’s founders, former Bain consultants Luke Anderson and Jake Bullock, said the point of the smaller doses of their products is to incentivize consumers to have multiple drinks without getting incapacitated.
Anderson also talked about Paltrow’s role in marketing the product, while Gwyneth Paltrow herself was quoted in many reports as saying that Cann sits at the intersection of two powerful trends: the ‘sober curious’ and ‘cannabis curious’ movements. As reported by CNBC, Paltrow dubbed cannabis the “hero ingredient of the future” and said that there are amazing medicinal qualities to cannabis.
Analysts and industry insiders also managed to become influential, especially in the industry media. Karan Wadhera, a managing partner at cannabis venture capital firm Casa Verde Capital, hoped weed drinks would attract large swathes of the public to pot from booze and bring back investor dollars after the industry fell out of favour due to a lack of profitability.
Similarly, Bill Van Faasen, Interim CEO of Acreage Holdings, which holds a portfolio of cannabis operations, said THC-infused beverages are a game-changer in US cannabis. But Michael Underhill, chief investment officer at Capital Innovations, cautioned that several bills would need to pass before US companies will be on the same regulatory playing field as their Canadian counterparts.
How PR and comms could help remove the stigma around cannabis
Even as consumer interest rises, lots of people retain negative perceptions relating to cannabis products. The reasons for this vary: the entrenched history of marijuana stigmatisation by governments and law enforcement undoubtedly has a role, as do worries about the physical and mental effects of these products, a belief they are only for “stoners” who do nothing but smoke weed, and history of “bikini-clad women in ads.”
Players wanting a slice in the expanding pie may face some PR difficulties – tying a brand to a subject as controversial as cannabis consumption is a dangerous enterprise from a reputational point of view. It should be done carefully.
Our media analysis shows how certain companies have tried to deal with that stigma. Here are a few comms tips based on our findings:
- Move cannabis away from the gateway drug narrative. There has been a persistent narrative around cannabis as a “gateway drug” to more dangerous substances. The gateway drug theory is generally a misconception: studies have found that marijuana has never been shown to have a gateway effect. The CDC states that while more research is needed, the majority of cannabis users do not graduate to more harmful “harder substances.” Cannabis legalisation has instead been linked to lower rates of opioid-related overdoses, death and harm. Interestingly enough, states with legalised cannabis have seen a 25% drop in opioid death rates than states where there is no legal access. A good PR strategy would involve educating the broader consumer base on these matters.
- Take advantage of consumers’ perception of “naturalness”: Cannabis is a perfect ingredient for the organic-centred millennials. Products labelled “organic” are in high demand, prompted by a growing interest in the emerging field of functional products positioned to boost immunity, help relax, aid sleep and improve mood in general. Brands are tapping into the consumers’ perception of the “naturalness” of food and drinks, which has evolved from a focus on sanitation to added ingredients like preservatives, flavours and sweeteners. The ever-increasing health awareness among consumers, coupled with the rise of the organic food industry, has put the notion of “naturalness” at the centre of many debates around the food and drink industry. Even fast-food company McDonald’s hit many headlines when it announced it would introduce plant-based burgers, chicken substitutes and breakfast sandwiches.
- Double down on luxury positioning. The food sector has already done that, proving that people are willing to pay a premium for lifestyle products – many vegan brands have managed to become quite hip by relying on the idea of exclusivity. In our sample, an example of a brand that has taken advantage of premiuisation to get under the media radar was House of Saka. Determined to own luxury positioning among its competitors in the infused beverage arena, Saka’s management team remained ruthlessly focused on exclusivity and the target female consumer. The premiumisation strategies work well when targeting Millenials, as 54% of 18-34-year-olds are likely to choose a premium drink versus just 35% of those over 55.
- Look at how Big Tobacco used cannabis to bolster its reputation. The interest of tobacco companies in the cannabis industry grew up along with the increasing number of US states that legalised cannabis. As the cannabis industry is moving further into the mainstream, tobacco companies are trying to diversify their portfolios with products offering less reputational risk. From tobacco’s perspective, the cannabis industry has a reputation for innovation and diversification, as companies are already selling products that divert from the traditional consumption of cannabis, including vape-based cannabis products, edibles and oils. Read our Big Tobacco analysis to find out more.
- Use influencers to educate. An effective PR and marketing plan can’t afford to exclude the use of influencers with a well-established authority on this tricky matter. Canopy Growth, for instance, has worked with celebrity chef Martha Stewart on a slate of CBD gummies, gels and oil drops, promising “gourmet flavours” such as kumquat and huckleberry. A good example from our media sample was Cann‘s work with Gwyneth Paltrow. Cann’s co-founder Luke Anderson told CNBC that when people think of Gwyneth Paltrow, they don’t think of ‘weed’, they think of cutting-edge solutions for today’s health and wellness needs: “Her endorsement is a sign that Cann (and microdose beverages more broadly) are a viable answer to that very common consumer pain point.”