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Coke Eyes Cannabis-Infused Beverages, Will Others Follow?

Zacks Equity Research
Infused-drinks could emerge as the next big thing in the beverage market, attracting the focus of many big players.

Coca-Cola Company KO is closely monitoring the rapidly growing marijuana-infused drinks market with the goal to take an entry to intensify its efforts to moving away from sugary sodas. This is part of Coca-Cola’s attempts to tap into markets outside its signature fizzy drinks in a bid to associate the brand with healthier options.

Earlier this week, Coca-Cola responded to a BNN Bloomberg report mentioning the company’s talks with Canada-based cannabis producer Aurora Cannabis to develop cannabidiol-infused beverages. Cannabidiol (CBD) is a non-psychoactive chemical present in marijuana.

Both Coca-Cola and Aurora denied sharing any specifics, but expressed their interest to enter the infused beverage market.  

Consumer Preferences Changing Beverage Space

Coke isn’t the first beverage maker to notice the potential of cannabis-infused drinks. The constant change in consumer preferences has made the beverage industry look for new options, and cannabis-infused drinks attracted their attention too.

The inclination toward healthier drinks has made soda sales drop to its lowest level in more than 30 years in the United States, according to a Bloomberg report. Therefore, the industry players are looking into the alternatives. And the legalization of marijuana in many states opens up new opportunities to develop cannabidiol-infused drinks.

Why Cannabidiol Has a Great Appeal  

According to a report by BDS Analytics, sales of cannabis-infused drinks hit $35.6 million in 2017 across Colorado, California, Washington and Oregon with many states reporting rapid growth. This fast-growing segment of beverage industry bets on the health benefits of cannabidiol.

According to the American Cancer Society, CBD reduces inflammation and pain treats seizures and even inhibits rapid spread of cancer.

As more consumers switch their sodas for cannabidiol-infused beverages, it makes the segment extremely lucrative. Many brewing businesses such as Heineken HEINY-owned Lagunitas Brewing Company, Molson Coors Brewing Company TAP and Corona beer maker Constellation Brands STZ are coming up with variants of marijuana-infused drinks to emerge as the biggest players in the new industry.

Coca-Cola’s interest to enter this industry could prove beneficial for both its shares and image, as more health-conscious customers nowadays associate cannabidiol-infused drinks with good health. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Heineken NV (HEINY) : Free Stock Analysis Report
 
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