The opportunity for investors in the CBD market is no secret, however, the segment with the most potential looks to be CBD beverages which are not yet common knowledge. The CBD industry is expected to reach $20 billion by 2025; the beverage segment will represent over 5% of the market; reaching $1.3 billion at a 43% CAGR.
A CAGR of over 40% is reserved for only the fastest growing industries, however, it should come as no surprise. In 2021 CBD beverages recorded ~$245 million in sales, a 50% improvement over 2020.
The small but fast-growing sector is ripe for rollup and M&A activity. Consider a few alcohol stats that illuminate the need for new alcoholic beverages. Here are beer consumption as a percentage of total alcohol intake by generation:
–Baby Boomers and Generation X–50%
–Millennials–25%
–Generation Z–12.5%
While THC remains illegal federally companies like Molson Coors (NYSE:TAP) are creating Hemp-derived CBD beverages as placeholders for when they can create more ‘intoxicating’ beverages more suited to the new generation’s proclivities. Real Brands, Inc. (OTCMKTS:RLBD) currently produces a CBD-infused Seltzer for athletes through its Phaze Sports subsidiary. CBD’s anti-anxiety and anti-inflammatory properties have proven extremely popular among athletes, making this a very high potential niche for RLBD.
Real Brands (OTCMKTS: RLBD) CEO Thom Kidrin recently noted in an interview the company is “looking to acquire an established CBD seltzer beverage company.” The company has filed its forms to uplist to the OTCQB, upon uplisting it is believed the company will have a few deals to announce based on Kidrin’s recent comments, adding a seltzer beverage to its roster of products would certainly be a win for investors. Generation Z, as we’ve shown is not big on beer, it is, however, huge on seltzer. 70% of Gen Zers have had a seltzer in the past year as opposed to only 36.5% for generations Millenial and up.
This is a similar path Canopy Growth (Nasdaq: CGC) took in the CBD beverage space. After launching a line of flavored CBD beverages called Quatreau, six months later the company partnered with Karma Water, a functional-beverage company based in New York to launch a CBD water in some 25,000 retailers across the U.S.
This water will compete with The Alkaline Water Company’s (OTCMKTS:WTER) A88CBD water among other offerings.
M&A AND PARNERSHIPS IN CBD BEVERAGE SPACE
Molson Coors (NYSE:TAP) who we mentioned earlier just expanded the distribution of its Truss line of CBD drinks, a joint venture with Canadian cannabis grower Hexo Corp. (Nasdaq:HEXO). The expansion went from just Colorado to 17 states.
Anheuser-Busch InBev (NYSE:BUD), the largest brewer globally, has a partnership with Tilray (Nasdaq:TLRY) to produce non-alcoholic, cannabis-infused beverages.
TLRY’s recent merger Aphria also acquired SweetWater Brewing, one of the biggest craft breweries in America, before the merger. Adding another potential infused product down the line.
NewAge (Nasdaq:NBEV) is a direct-to-consumer wellness company and has licensed rights for certain Marley ready-to-drink beverages.
POTENTIAL M&A IN 2022
The aforementioned Real Brands, Inc.’s (OTCMKTS:RLBD) largest shareholder is Turning Point Brands (NYSE:TPB). TPB is most well known for brands ZigZag and Stokers. The company has shown however, it is interested in establishing itself in the CBD space. Its built in distribution and marketing network could be a major boost for RLBD and its brands including the CBD-Seltzer offering. If TPB decides to increase its ownership in RLBD and potentially adds its products to its line, the stock would benefit significantly.
Make sure to keep RLBD on your radar.
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